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Can anyone clarify the difference between a letter of weakness and a management representation letter for me?
Is it this:Letter of weakness:
a letter/report sent from auditors to BOD advising them of any particular control weaknesses they have identified during the audit, and suggestions to remedy these.Management representation letter:
a letter drafted by the auditor, but agreed and signed by management, and then returned to the auditors, dated the same day as the FS are approved by mgt.
It can contain one or several statements regarding the mgt acceptance of their
– responsibilities for preparing the FS
– stating that they’ve provided all info they have to the auditor etc.
– verifying any other info that the auditor requires mgt to verify in writing.Is this the difference between the “letter of weakness” & “management representation letter”?
Thanks.
That is the essence of what these letters are.
Letters of representation might be the only evidence that auditors have of directors’ intentions (eg not to close down part of the undertaking). Also gives some corroboration with areas such as inventory and receivables valuations, all liabilities have been included, no material irregularities.
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