Who's responsible for making a management letter? and what's its purpose?

A management letter is a form letter written by a company's external auditors, which is signed by senior company management. 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. In essence, the letter states that all of the information submitted is accurate, and that all material information has been disclosed to the auditors. The auditors use this letter as part of their audit evidence. The letter also shifts some blame to management, if it turns out that some elements of the audited financial statements do not fairly represent the financial results, condition, or cash flows of the business.

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The management (representation) letter is actually made by the external auditor in behalf of the company’s executive management for its approval and signature.   The draft of the letter is prepared by the external auditor for review and approval by the management.  Once approved, the letter is signed by majority partner or chairman of the board together with finance manager or finance director for larger corporate structures.

 

The external auditor initiates the drafting of the letter to ensure that the salient provisions of the company’s inherent obligations are not omitted.   The purpose of the management letter are as follows:

 

·         To express the management’s belief that the financial statements are presented fairly in accordance with IFRS standards effective 1 January 2017;

·         The title to company’s assets shown in the balance sheet are owned by the company and there are no liens and encumbrances against these assets.  Any lease or mortgage contracts against these assets are properly recorded in the balance sheet;

·         The value of the non-current assets are not impaired.  The management has performed an impairment test to ensure that the assets had lost its book value;

·         Trade receivables represent valid third-party claims from arms-length transactions;

·         Zakat is correctly calculated and paid;

·         There are no arrangement with any financial institutions restricting company’s cash balance.  Any such restrictions should be disclosed in the notes to financial statements;

·         All related party transactions are disclosed;

·         The management confirms that it is now aware of fraud, irregularities and material misstatements in the financial statements;

·         The company is not in violation of laws or regulations;

·         The company has strong reason to believe that its operations will continue as a going concern, and

·         The company disclosed any material subsequent events affecting its financial position after the balance sheet date.

 

 

Management letter is prepared by companys external auditor signed by the management of the company  .Its main purpose is to reminds the responsibility pf the client management

Agreed with the answer of specialized colleagues

A management letter is written an external auditor, which is signed by senior management of the company. 

The Purpose is to

-ensure the submitted information is accurate

-can be used as an audit evidence

-and to shift some blame on management in case of unfair representation of financial results

the one who sing the letter is the responsible one , the purpose is to limit the responsibility.

A management letter is an auditor's letter addressed to the client, according to Allbusiness.com. It is a letter written by company management that confirms the accuracy of an audit. An audit is an examination and verification of a company's financial and accounting records and supporting documents presented by a professional, such as a certified public accountant

I agree with previous answer

The team holding the Management and The Letter is supposed to be issed for the share- Holders plus Marketing team to generate an adequate Marketing future plan Based on them.

External Auditor is responsible for making a management letter

The management letter can provide innovative ideas, based on industry best practices, about ways to improve internal control systems, streamline operations, and cut back on expenses.  Auditors want to help their clients succeed, and the management letter should be viewed as a value-added "bonus" to the audited financial statement.

Following is a sample of the representations that may be included in the management representation letter:

·         Management is responsible for the proper presentation of the financial statements in accordance with the applicable accounting framework

·         All financial records have been made available to the auditors

·         All board of directors minutes are complete

·         Management has made available all letters from regulatory agencies regarding financial reporting noncompliance

·         There are no unrecorded transactions

·         The net effect of all uncorrected misstatements is immaterial

·         The management team acknowledges its responsibility for the system of financial controls

·         All related party transactions have been disclosed

·         All contingent liabilities have been disclosed

·         All unasserted claims or assessments have been disclosed

·         Auditors typically do not allow management to make any changes to the content of this letter before signing it, since this would effectively reduce the liability of management.

·         An auditor typically will not issue an opinion on a company's financial statements without first receiving a signed management representation letter.