Written representations definition
/What are Written Representations?
Written representations are statements made by client management, confirming certain topics or supporting audit evidence. These representations are needed by the auditor as supporting evidence in an audit engagement, since management acknowledges its responsibilities in certain areas and attests to various issues. These representations are considered to be supporting evidence, so they are intended to confirm other audit evidence; that is, the auditor should not rely solely on written representations.
The auditor assembles the formal list of representations and forwards it to the client to be signed, either by management or those charged with governance of the client.
Types of Written Representations
Management should provide written representations to the auditor concerning the following issues:
Completeness. That it has provided the auditor with all relevant information and access to information, and that all transactions have been properly recorded in the accounting system.
Estimates. That it believes all significant assumptions made when making accounting estimates are reasonable. These representations may include the following topics:
The appropriateness of the measurement processes used to determine accounting estimates.
Whether any subsequent events have occurred that would require adjustments to the estimates.
Whether the assumptions used reflect management’s intent.
Whether the related disclosures are complete and appropriate.
Fraud. That it is responsible for the design, implementation, and maintenance of internal controls to prevent and detect fraud, has disclosed the results of its risk assessment that the financial statements could be materially misstated because of fraud, and has disclosed its knowledge of any fraud that involves its management or other employees or knowledge of allegations relating to such fraud.
Inquiries with outside parties. That it has made inquiries with actuaries, staff engineers working on environmental liability issues, legal counsel, and others concerning matters that require specialized knowledge.
Laws and regulations. That it has disclosed all instances of noncompliance with laws and regulations whose effects should be considered when preparing financial statements.
Litigation and claims. That all litigation and claims whose effects should be considered by management when preparing the financial statements have been disclosed and accounted for.
Preparation and presentation of financial statements. That it has fulfilled its responsibility for the preparation and fair presentation of the financial statements, as well as for the design, implementation, and maintenance of a system of internal controls.
Related party transactions. That it has disclosed all related parties, as well as the transactions related to them. A further disclosure to consider adding is whether there are any related party transactions involving undisclosed side agreements.
Subsequent events. That all events occurring subsequent to the date of the financial statements have been accounted for or disclosed.
Uncorrected misstatements. That it believes the effects of uncorrected misstatements are immaterial to the financial statements.
Related AccountingTools Courses
How to Conduct a Compilation Engagement
Why are Written Representations Important?
Written representations are important for the following reasons:
Acknowledgment of responsibility. Written representations confirm that management acknowledges its responsibility for the preparation and fair presentation of financial statements. This is essential because auditors rely on management to accurately maintain records and comply with reporting frameworks. Without this formal acknowledgment, auditors would face uncertainty about management’s understanding of its duties. The written statement thus strengthens the auditor’s basis for concluding that management accepts responsibility for the information being audited.
Confirmation of information provided. Management’s representations serve to affirm that all relevant information and access to records have been provided to the auditors. Even when auditors perform extensive procedures, there may still be aspects that are only fully verifiable through management’s assurances. By obtaining these confirmations in writing, auditors reduce the risk of relying on incomplete or misleading information. This helps ensure the audit opinion is based on a complete and truthful understanding of the client’s situation.
Limitation of auditor's liability. By obtaining written representations, auditors create documentation that can defend against potential legal claims. If a material misstatement later surfaces, the representations demonstrate that the auditor reasonably relied on management’s assertions. This shifts part of the burden back onto management, highlighting that certain risks were disclosed or acknowledged during the audit. As a result, written representations act as a protective measure in auditor risk management.
Support for audit conclusions. Written representations provide critical evidence to corroborate the audit conclusions reached during fieldwork. Sometimes certain matters — like contingent liabilities or related-party transactions — cannot be fully verified through physical evidence alone. Management’s formal statements help fill these gaps by affirming matters that influence the final audit opinion. In this way, written representations enhance the sufficiency and appropriateness of audit evidence collected.