Importance of MRL Audit

Management representation letter is form letter by external company auditor which is signed by senior company management . The financial statement of company has submitted the auditor for the analysis. The CEO of most senior accountant person are usually required to sign the letter. The information accurate submitted and all material information has been disclose the auditor. The letter also shifted blame the management turns out some element of audited financial statement not represent the financial result condition and cash flow of the business.

1. There are no unrecorded transaction.
2. All board of director minutes are incomplete.
3. All related party transaction are disclosed.
4. All contingent liabilities have been disclosed.
5. All financial records have been available to the auditor.
6. Management have no knowledge of fraud within the company.

Importance and benefit  for auditor:

It is responsibility  and  right of an auditor  to take written  representation and management  and higher authority. There are no material  misstatement  is done  by management  in preparation and presentation  of financial  statement are company  that the financial statement  are prepared  are asaccounting standard  and related rules  and regulation  applicable of company.

List of auditing standard  containing  requirement of  written representation :

1. SA-240 : The auditor responsibilities relating to fraud in an audit of financial statement .
2. SA-250 : Consideration of law and regulation in an audit of financial statement.
3. SA-450: Evaluation of misstatement identify during the audit.
4. SA-501: Audit evidence- Specific consideration for selected item.
5. Sa-540: auditing accounting estimates, including fair value accounting estimate and related disclose.
6. SA-550: Related parties
7. SA-570: Going concern

Work as an audit evidence  for the auditor:

Audit evidence are information  used by auditor is arriving at conclusion  on which the auditor opinion  is based.  Written representation  are necessary  information that the  auditor required  in connection  with the audit of  financial statement. Similar  to response to inquire written  representation  are audit evidence.