Here is a sample Letter of Representation. Please edit the terms in [brackets].
[Date]
[Audit Firm]
[Audit Firm Address]
In connection with your review of the interim Reporting Package of [Company A] (the Company) as of [Date] and for the six month period then ended, we recognize that obtaining representations from us is a significant procedure in enabling you to perform your review for the purpose of determining whether you are aware of any material modifications that should be made to the interim Reporting Package in order for them to be in conformity with International Financial Reporting Standards (IFRS).
Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement.
Accordingly, we make the following representations, which are true to the best of our knowledge and belief:
Management’s responsibilities
We recognize that, as members of management of the Company, we are responsible for the fair presentation of its trial balance as of, and for the six-month period ended [Date]. We believe that such interim Reporting Package have been prepared in conformity with IFRS applicable to the interim Reporting Package and have been applied on the same basis as that used for the Company’s audited financial statements as of and for the year ended [Date] and prior half-year reviews, and reflects all adjustments necessary for a fair presentation of the interim Reporting Package.
We also recognize that, as members of management of the Company, we are responsible for establishing and maintaining effective internal control over financial reporting, for making an annual assessment of the effectiveness of internal control over financial reporting, and for providing half-year certifications with respect to our responsibility for, and certain disclosures about, the company’s internal control over financial reporting.
We have responded fully to all inquiries made to us by you during your review and have made available to you all financial data and records.
We have no plans or intentions that may materially affect the carrying value or classification of assets and liabilities.
Uncorrected misstatements
There are no uncorrected misstatements identified during the current interim review and pertaining to the interim period presented.
Internal control
There are no transactions of a material nature, individually or in the aggregate, that have not been properly recorded in the accounting records underlying the Reporting Package.
We have disclosed to you all deficiencies in the design or operation of internal control over financial reporting that we believed to be significant deficiencies or material weaknesses.
There were no significant changes in the design or operation of the Company’s internal control over financial reporting as it relates to the preparation of the interim financial information that occurred during the six-months ended [Date].
Fraud
We acknowledge our responsibility for the design and implementation of programs and controls to prevent and detect fraud. We have no knowledge of any fraud or suspected fraud involving management or other employees who have a significant role in the Company’s internal control over financial reporting. In addition, we have no knowledge of any fraud or suspected fraud involving other employees where the fraud could have a material effect on the interim Reporting Package. We have disclosed to you all allegations of financial improprieties, including fraud or suspected fraud, coming to our attention (regardless of the source or form and including, without limitation, allegations by “whistle-blowers”) where such allegations could result in a misstatement of the interim Reporting Package or otherwise affect the financial reporting of the Company.
Minutes and contracts
The dates of meetings of shareholders, directors, committees of directors and important management committees are as follows:
[List Dates and Meetings here]We have made available to you the minutes of these meetings or summaries of actions at recent meetings for which minutes have not yet been prepared and such minutes or summaries are complete and authentic records or summaries of such meetings.
We also have made available to you all significant contracts, including amendments, and agreements and have communicated to you all significant oral agreements. We have complied with all aspects of the contractual agreements that would have a material effect on the interim Reporting Package in the event of noncompliance.
Related party transactions
Transactions with related parties, as defined in International Auditing Standard (IAS) 24: Related Party Disclosures and related amounts receivable or payable, including sales, purchases, loans, transfers, leasing arrangements and guarantees, have been properly recorded and/or disclosed in the interim Reporting Package.
Ownership and pledging of assets
The Company has satisfactory title to all assets appearing in the balance sheets. No security agreements have been executed under the provisions of the Uniform Commercial Code, and there are no liens or encumbrances on assets, nor has any asset been pledged. All assets to which the Company has satisfactory title appear in the balance sheets.
Oral or written guarantees
There are no oral or written guarantees including guarantees of the debt of others.
Risks and uncertainties
Significant estimates and material concentrations known to management that are required to be disclosed in accordance with IFRS, have been properly disclosed in the interim Reporting Package.
Contingent liabilities
There are no unasserted claims or assessments, including those our lawyers have advised us of that are probable of assertion and must be disclosed in accordance with IAS 37: Provisions, Contingent Liabilities, and Contingent Assets.
There have been no violations or possible violations of laws or regulations in any jurisdiction whose effects should be considered for disclosure in the interim Reporting Package or as a basis for recording a loss contingency.
There have been no internal investigations or communications from regulatory agencies or government representatives concerning investigations or allegations of noncompliance with laws or regulations in any jurisdiction, noncompliance with or deficiencies in financial reporting practices, or other matters that could have a material effect on the interim Reporting Package.
There are no other liabilities or gain or loss contingencies considered material, individually or in the aggregate, that are required to be accrued or disclosed by IAS 37, nor are there any accruals for loss contingencies included in the interim balance sheet or gain contingencies reflected in the interim earnings that are not in conformity with the provisions of IAS 37.
Independence
We are not aware of any new business relationship or substantial changes to existing business relationships between any officer, director or substantial stockholder (or any entity for or of which such an officer or director acts in a similar capacity) and [Audit Firm] or any other member firm of the global [Audit Firm] organization (any of which, an “[Audit Firm]”), other than one pursuant to which an [Audit Firm] Firm performs professional services. For this purpose, a “substantial stockholder” is a person or entity (excluding entities that are diversified management investment companies as defined by section 5(b)(1) of the Investment Company Act of 1940) that owns a beneficial interest of five percent or more in the Company and is in a decision-making capacity.
We are not aware of any reason that [Audit Firm] would not be considered to be independent.
Receivables and revenues
Receivables represent valid claims against the debtors indicated and do not include amounts for goods shipped or services provided subsequent to the balance sheet date, goods shipped on consignment or approval, or other types of arrangements not constituting sales. All revenue recognized as of the balance sheet date has been realized (or is realizable) and earned. Revenue has been recognized only where the criteria of IAS 18 Revenue has been met. Revenue has not been recognized before (1) risk and ownership are transferred to the customer, (2) The Company has no more effective control over the goods, (3) the amount of revenue can be measured reliably and (4) it is probable that the economic benefits associated with the transaction will flow to the Company.
Adequate provision has been made for losses, costs and expenses that may be incurred subsequent to [Date] in respect of sales and services rendered prior to that date and for uncollectible accounts, discounts, returns and allowances, etc., that may be incurred in the collection of receivables at that date.
We have disclosed to you all sales terms, including all rights of return or price protection adjustments and warranty provisions. We have made available to you all significant contracts, communications (either written or oral), and other relevant information pertaining to arrangements with our customers, including distributors and resellers.
Inventory
Inventories, including goods that are defective, slow-moving, obsolete or unusable, are stated at amounts not in excess of their estimated net realizable values.
Adequate provision has been made for losses under firm purchase commitments for goods or inventory. There have been no reductions of the selling prices of finished goods subsequent to [Date] and none are contemplated.
Subsequent events
No events or transactions have occurred since [Date] or are pending that would have a material effect on the Reporting Package, or that are of such significance in relation to the Company’s affairs to require mention in a note to the Reporting Package in order to make it not misleading regarding the financial position, results of operations or cash flows of the Company.
We understand that your interim review was made in accordance with interoffice instructions you received from [Audit Firm] and were, therefore, designed primarily for the purpose of the providing an interoffice conclusion to [Audit Firm] on the Reporting Package of the Company taken as a whole, and that your tests of the accounting records and other auditing procedures were limited to those that you considered necessary for that purpose. We understand that your interim review consisted principally of performing analytical procedures and making inquiries of management responsible for financial and accounting matters. We also understand that your procedures would not necessarily uncover all matters of significance that would be disclosed in the audit of the Company’s financial statements.
Very truly yours,
No comments:
Post a Comment