DOCUMENTATION OF REPRESENTATIONS BY MANAGEMENT


The auditor would ordinarily include in audit working papers evidence of management’s representations in the form of a summary of oral discussions with management or written representations from management.

A written representation is better audit evidence than an oral representation and can take the form of:

(a) A representation letter from management;

(b)Aletter from the auditor outlining the auditor’s understanding of management’s representations, duly acknowledgedand confirmed by management; or

(c) Relevant minutes of meetings of the board of directors or similar body or a signed copy of the financial statements.

Basic Elements of a Management Representation Letter

When requesting a management representation letter, the auditor would request that it be addressed to the auditor, contain specified information and be appropriately dated and signed.

A management representation letter would ordinarily be dated the same date as the auditor’s report. However, in certain circumstances, a separate representation letter regarding specific transactions or other events may also be obtained during the course of the audit or at a date after the date of the auditor’s report, for example, on the date of a public offering.

A management representation letter would ordinarily be signed by the members of management who have primary responsibility for the entity and its financial aspects (ordinarily the senior executive officer and the senior financial officer) based on the best of their knowledge and belief. In certain circumstances, the auditor may wish to obtain representation letters from other members of management. For example, the auditor may wish to obtain a written representation about the completeness of all minutes of the meetings of shareholders, the board of directors and important committees from the individual responsible for keeping such minutes.