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REPRESENTATION BY MANAGEMENT

MEANING:
A letter written by company management which attests to the accuracy of
an audit. In this letter, management confirms that the all information
contained within the company's financial statements is true and accurate
and that all information has been disclosed.
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.

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

This letter is an undertaking by the management to the auditor.

Its a letter by which management is taking responsibility for each and
every thing of the company in every area of accounts.

If the management is denying to present then it is understood that
there is something wrong in the company.

in this case auditor will give negative report and auditor will also
disclose in the report that the management has not taken
responsibility of that report.

If a representation made by management is contradicted by other
audit evidence, the auditor should investigate the circumstances and
consider the reliability of the representation made. Based on the
circumstances, the auditor should consider whether his or her
reliance on management's representations relating to other aspects
of the financial statements is appropriate and justified.