Question

Financial Auditing

What is the purpose of a client's representation letter? Who should sign it? What representations must be in a representation letter? When should a lawyer's letter be dated?

Answer 1

The major purposes of obtaining a client representation letter include: (a) to remind the client officers of their primary responsibility for the financial statements, (b) to document in the audit working papers the client's responses to many questions asked by the auditors during the engagement, and (c) to provide evidence in areas where accounting presentation may be dependent upon management's future intentions

The manager prepare the the representation letter and should be signed by clients both chief executive officer and chief financial officer.

The professional standards do not specify what representations be obtained by the independent auditor. specific representations depend on the circumstances of the engagement and the nature and basis of presentation of the financial statements.

Written Representations about Management’s Responsibilities On thePreparation of the Financial Statements ,information provided on completeness of transactions, description of management responsibility in the presentation and other representations

The date of the written representations shall be as near as practicable to, but not after, the date of the auditor’s report on the financial statements. The
written representations shall be for all financial statementsand period(s) referred to in the auditor’s report