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The items included in the written representation letter will vary depending on the engagement and the nature and basis of financial statement presentation. Some commonly included items are:
1. Management’s acknowledgment of its responsibility for the fair presentation in the financial statements of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles
2. Management’s belief that the financial statements are fairly presented in conformity with generally accepted accounting principles
3. Availability of all financial records and related data
4. Completeness and availability of all minutes of meetings of stockholders, directors, and committees of directors
5. Communication from regulatory agencies concerning noncompliance with or deficiencies in financial reporting practices
6. Absence of unrecorded transactions
7. Management’s belief that the effects of any uncorrected financial statement misstatements aggregated by the auditor during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole (Note: a summary of such items should be included in or attached to the letter.)
8. Management’s acknowledgment of its responsibility for the design and implementation of programs and controls to prevent and detect fraud
9. Knowledge of fraud or suspected fraud affecting the entity involving (1) management, (2) employees who have significant roles in internal control, or (3) others where the fraud could have a material effect on the financial statements
. Knowledge of any allegations of fraud or suspected fraud affecting the entity received in communications from employees, former employees, analysts, regulators, short sellers, or others
. Plans or intentions that may affect the carrying value or classification of assets or liabilities.
. Information concerning related-party transactions and amounts receivable from or payable to related parties
. Guarantees, whether written or oral, under which the entity is contingently liable
. Significant estimates and material concentrations known to management that are required to be disclosed in accordance with the AICPA’s Statement of Position-6, Disclosure of Certain Significant Risks and Uncertainties
. Violations or possible violations of laws or regulations whose effects should be considered for disclosure in the financial statements or as a basis for recording a loss contingency
. Un-asserted claims or assessments that the entity’s lawyer has advised are probable of assertion and must be disclosed in accordance with Financial Accounting SAS—Management Representations Standards Board (FASB) Statement No.5, Accounting for Contingencies
. Other liabilities and gain or loss contingencies that are required to be accrued or disclosed by FASB Statement No.5
. Satisfactory title to assets, liens, or encumbrances on assets, and assets pledged as collateral
. Compliance with aspects of contractual agreements that may affect the financial statements
. Information concerning subsequent events
