Written representations

In this lesson

1. 0:00 Written representations defined
2. 0:27 Key confirmations management must provide
3. 1:30 How to obtain the representation letter
4. 2:27 Effectiveness of representations as audit evidence
5. 4:05 Written representations for legal claims

About this lesson

Understanding written representations will help you recognise their role in the audit process and, importantly, their limitations as evidence. Written representations are formal letters from a company's directors to the auditors, confirming they've provided all necessary information and that the financial statements are free from material misstatement. The auditor drafts the letter, the client prints it on their letterhead and signs it, and it's dated as close as possible to the audit report date. This procedure must be completed before the audit concludes. The letter typically confirms that all books and records have been made available, related party disclosures are complete, and there's no non-compliance with regulations. A key principle you need to grasp is that written representations, while mandatory, are not always the strongest form of evidence. Management will naturally believe their own work is reasonable, so their confirmation adds limited assurance for areas requiring independent verification. Written representations are most valuable for confirming complete disclosure of information rather than validating judgements or forecasts. When auditing matters like cash flow forecasts or legal claims, you'll need stronger evidence—such as comparing past forecasts to actual results or obtaining legal letters from the client's lawyers—to properly support your audit conclusions.

Duration: 6m