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CPA/AUD/Written Representations & Completing the Audit

Written Representations & Completing the Audit

Management representation letters, subsequent events procedures, and wrapping up the engagement.

Medium 50 minArea IV: Forming Conclusions and Reporting

The management representation letter

Required in every audit. It is dated as of the date of the auditor's report (not year-end) and covers all periods in the auditor's report. It is signed by those with overall responsibility for financial and operating matters — typically the CEO and CFO.

IMPORTANT: Representations complement other evidence; they are never a substitute for it. If management refuses to provide the representation letter, that is a scope limitation requiring a disclaimer of opinion or withdrawal — a qualified opinion is not sufficient.

Completing-the-audit checklist

  1. Perform final analytical procedures (required)
  2. Search for unrecorded liabilities
  3. Perform subsequent events procedures
  4. Obtain the legal letter (attorney's letter) about litigation, claims, and assessments
  5. Evaluate going concern
  6. Accumulate and evaluate uncorrected misstatements (individually and in aggregate)
  7. Obtain written representations
  8. Complete engagement quality review where required
  9. Communicate with those charged with governance

Subsequent events and subsequent discovery

PeriodAuditor's responsibility
Balance sheet date → report dateActive responsibility — perform procedures to identify subsequent events
After the report dateNo responsibility to search, but must act on facts that come to attention

If facts existing at the report date come to light afterward and would have changed the report, the auditor discusses with management, determines whether the statements need revision, and if management refuses to act, notifies those charged with governance and takes steps to prevent reliance on the report.

EXAM TIP: Legal letter refusal by the client's attorney to respond is also a scope limitation → qualified opinion or disclaimer.