Is a letter of representation required?

Is a letter of representation required?

Summary. An audit letter of representation is a form letter prepared by a company’s service auditor and signed by a member of senior management. The service auditor must obtain a signed representation letter that includes, at a minimum, the required representations specified by the AICPA in order to opine an audit.

Are auditors required to obtain written representations?

The auditor should obtain written representations from management (those charged with governance when appropriate) that they believe that they have fulfilled their responsibilities: To respond appropriately if management does not provide the written representations requested by the auditor.

When should the client’s representation letter be obtained?

Usually, a client’s CEO, CFO, or other higher senior accounting personnel sign the letter. This process must take place before auditors present an audit report regarding the client’s financial statements. The content of the representation letter may vary from one firm to another.

Is SAS 114 letter required?

This “SAS 114” letter is an American Institute of CPAs (AICPA) required communication letter for all financial statement audits. In performing an audit of your plan’s internal controls and plan financials, your auditors are required to obtain an understanding of the plan’s operations and internal controls.

What is the purpose of representation letter?

written confirmation from management to the auditor about the fairness of various financial statement elements. The purpose of the letter is to emphasize that the financial statements are management’s representations, and thus management has the primary responsibility for their accuracy.

Is management representation letter mandatory?

The CEO and the most senior accounting person (such as the CFO) are usually required to sign the letter. The letter is signed following the completion of audit fieldwork, and before the financial statements are issued along with the auditor’s opinion.

Why do auditors get a written representation letter?

Written representation – A written statement by management provided to the auditor to confirm certain matters or to support other audit evidence.

In what circumstances are auditors required to obtain written representations?

The auditor shall request relevant parties to provide a written representation whether they believe that all records, documentation, unusual matters of which they are aware, and other information relevant to the audit have been made available to the auditor.

Why an auditor should obtain a letter of representation from the client?

The letter attests to the accuracy of the financial statements that the company has submitted to the auditors for their analysis. The CEO and the most senior accounting person (such as the CFO) are usually required to sign the letter.

Why does the auditor obtain a representation letter from management?

Management representation is a letter issued by a client to the auditor in writing as part of audit evidences. It serves to document management’s representations during the audit, reducing misunderstandings of management’s responsibilities for the financial statements.

What does SAS 114 stand for?

Statement on Auditing Standards
Your audited financial statements have been delivered, but so have these two communication letters: the SAS (“Statement on Auditing Standards”) 114 and SAS 115 letters.

Has SAS 99 been superseded?

Supersedes: AU section 316 (SAS No. 99, Consideration of Fraud in a Financial Statement Audit, as amended) Changes From Superseded AU Section: The clarified SAS does not change or expand superseded AU section 316 in any significant respect.

Who is required to sign a representation letter?

Guidance states that “the letter should be signed by those members of management with overall responsibility for financial and operating matters whom the auditor believes are responsible for and knowledgeable about, directly or through others in the organization, the matters covered by the representations”.

What is amendment to statement of generally accepted auditing standards?

Amendment to Statement on Auditing Standards No. 95, Generally Accepted Auditing Standards This section provides guidance to the auditor who uses the work of a specialist in performing an audit in accordance with generally accepted auditing standards.

What does a representation letter do for a CPA?

From a practical standpoint, this letter assures the CPA that management has given the accountant all pertinent information. The financial statements belong to the Association, not to the CPA, so it is important that management take responsibility for the amounts contained within the final audit or review report.

When did the generally accepted accounting standards letter come out?

Our Responsibility under Generally Accepted Auditing Standards Our responsibility under generally accepted auditing standards has been described in our engagement letter dated July 10, 2015.