Engagement Letter Example

Question 1

Monday

Answer 1

Thanks for providing the draft of the letter of representation. Here’s an example letter of representation, based on your provided content, that reflects the key points and structure:

[Entity’s Letterhead]

To: [Auditor’s Name/Firm]

[Date]

Representation Letter

Dear [Auditor’s Name],

This representation letter is provided in connection with your audit of the financial statements of ABC Ltd for the year ended 31 December 20X1 for the purpose of expressing an opinion as to whether the financial statements are presented fairly, in all material respects, (or give a true and fair view) in accordance with International Financial Reporting Standards.

We confirm that (to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves):

1. We have fulfilled our responsibilities for the preparation and presentation of the financial statements as set out in the terms of the audit engagement dated [Date], and, in particular, the financial statements are fairly presented (or give a true and fair view) in accordance with International Financial Reporting Standards.
2. Significant assumptions used by us in making accounting estimates, including those measured at fair value, are reasonable. (ISA 540)
3. Related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the requirements of International Financial Reporting Standards. (ISA 550)
4. All events subsequent to the date of the financial statements and for which International Financial Reporting Standards require adjustment or disclosure have been adjusted or disclosed. (ISA 560)
5. The effects of uncorrected misstatements are immaterial, both individually and in the aggregate, to the financial statements as a whole. A list of the uncorrected misstatements is attached to the representation letter. (ISA 450)

1. We have provided you with:
   
   • All information, such as records and documentation, and other matters that are relevant to the preparation and presentation of the financial statements.
   • Additional information that you have requested from us.
   • Unrestricted access to those within the entity.
2. All transactions have been recorded in the accounting records and are reflected in the financial statements.
3. We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud. (ISA 240)
4. We have disclosed to you all information in relation to fraud or suspected fraud that we are aware of and that affects the entity and involves:
   
   • Management
   • Employees who have significant roles in internal control; or
   • Others where the fraud could have a material effect on the financial statements. (ISA 240)
5. We have disclosed to you all information in relation to allegations of fraud, or suspected fraud, affecting the entity’s financial statements communicated by employees, former employees, analysts, regulators, or others. (ISA 240)
6. We have disclosed to you the identity of the entity’s related parties and all the related party relationships and transactions of which we are aware. (ISA 550)

Yours sincerely,

[Chief Financial Officer / Chief Executive Officer]

[ABC Ltd]

This example covers the essentials while being succinct. If you need any more details or adjustments, let me know!