Management rep letter vs limitation of scope

Written representations are simply just one more piece of confirmatory evidence

It is improbable that any single piece of evidence will be sufficient for the auditors’ enquiring minds about any material matter from within the financial statements of a client

So written representations are just one other piece to be added to all the other pieces to enable the auditor to reach an opinion about those individual material matters

Imagine all the different types of evidence available to an auditor in their search for confirmation of the financial statement items assertions as individual bricks that the auditor will use to construct a “wall of evidence” and that wall will become stronger with additional pieces until the marginal benefit of one more brick is outweighed by the cost (in dollars and in time spent) of obtaining that evidence

There is a general principle that says that there is NO situation for any material matter where the sole piece of audit evidence is the written representations of management

One further point – if it really were acceptable to simply obtain written representations from management, what’s the point of an audit? Why not simply get the board to write something like “We firmly and sincerely believe that all the figures shown by us in our financial statements are not only the basis for a true and fair view but they are also 100% correct, accurate and reliable”

And the auditors’ reaction? “Oh that’s ok then, thank you”

Hmmm! Think of the time savings 🙂

OK?