Question

What is the evidentiary value of a management representation letter?

Answer 1

Management representation is a letter issued by a client to the auditor in writing as part of audit evidences.

1) It serves to document management's representations during the audit, reducing misunderstandings of management's responsibilities for the financial statements.

2) The letter attests to the accuracy of the financial statements that the company has submitted to the auditors for their analysis.

3) For audit evidence, it is reliable if the auditor has no other means of obtaining evidence.

4) the case of contradictions between other sources of evidence and management representations, the auditor should conduct further investigations.