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Management Representation Letter: Format, Content, Signature

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As of 2019, the FASB requires publicly traded companies to prepare financial statements following the Generally Accepted Accounting Principles (GAAP). Auditors are required by professional standards to report, in writing, internal control matters that they believe should be brought to the attention of those charged with governance (the board). Generally, if your auditor is going to put an internal control matter in a letter, they have assessed that the matter was the result of a deficiency in internal controls. This is an important part of that audit that the profession does not take lightly.

One common example of a deficiency in internal control that’s severe enough to be considered a material weakness or significant deficiency is when an organization lacks the knowledge and training to prepare its own financial statements, including footnote disclosures. The “SAS 115” letter is usually issued when any significant deficiencies or material weaknesses would have been discussed with management during the audit, but are not required to be communicated in written form. In performing an audit of your Plan’s internal controls and plan financials, your auditors are required to obtain an understanding of the Plan’s operations and internal controls.

A management representation letter is a form letter written by a company’s external auditors, which is signed by senior company management. The letter attests to the accuracy of the financial statements that the company has submitted to the auditors for their analysis. The CEO and the most senior accounting person (such as the CFO) are usually required to sign the letter. The letter is signed following the completion of audit fieldwork, and before the financial statements are issued along with the auditor’s opinion. External auditors follow a set of standards different from that of the company or organization hiring them to do the work.

In doing so, they may become aware of matters related to your Plan’s internal control that may be considered deficiencies, significant deficiencies, or material weaknesses. Audits performed by outside parties can be extremely helpful in removing any bias in reviewing the state of a company’s financials. Financial audits seek to identify if there are any material misstatements in the financial statements. An unqualified, or clean, auditor’s opinion provides financial statement users with confidence that the financials are both accurate and complete. External audits, therefore, allow stakeholders to make better, more informed decisions related to the company being audited.

The representation should reaffirm your client’s understanding of all significant terms in the engagement letter. A relevant assertion is a financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause the financial statements to be materially misstated.

The purpose of an internal audit is to ensure compliance with laws and regulations and to help maintain accurate and timely financial reporting and data collection. It also provides a benefit to management by identifying flaws in internal control or financial reporting prior to its review by external auditors.

Depending on materiality and other qualitative factors, the auditors will consider the deficiency to be an “other” matter, significant deficiency, or material weakness. The auditor has discretion on which category the deficiency falls into, but are otherwise required to use the standard wording and definitions in the letter.

It serves to document management’s representations during the audit, reducing misunderstandings of management’s responsibilities for the financial statements. The definition of good internal controls is that they allow errors and other misstatements to be prevented or detected and corrected by (the nonprofit’s) employees in the normal course of performing their duties.

Material weaknesses or significant deficiencies may exist that were not identified during the audit, and auditors are required to disclose this in their written communication. The auditor’s report contains the auditor’s opinion on whether a company’s financial statements comply with accounting standards. The results of the internal audit are used to make managerial changes and improvements to internal controls.

What is a management representation letter?

A management representation letter is a form letter written by a company’s external auditors, which is signed by senior company management. The letter attests to the accuracy of the financial statements that the company has submitted to the auditors for their analysis.

A control objective provides a specific target against which to evaluate the effectiveness of controls. Management representation is a letter issued by a client to the auditor in writing as part of audit evidences. The representations letter must cover all periods encompassed by the audit report, and must be dated the same date of audit work completion.

These types of auditors are used when an organization doesn’t have the in-house resources to audit certain parts of their own operations. The assertion of completeness is an assertion that the financial statements are thorough and include every item that should be included in the statement for a given accounting period. The assertion of completeness also states that a company’s entire inventory, even inventory that may be temporarily in the possession of a third party, is included in the total inventory figure appearing on a financial statement. The compilation standards do not require practitioners to obtain a management representation letter, but this does not mean that it’s not a prudent thing to do. Obtaining a representation letter helps to ensure your client understands the services that you have provided, the limitations on the work you have completed, and that they are ultimately responsible for their financial statements.

The biggest difference between an internal and external audit is the concept of independence of the external auditor. When audits are performed by third parties, the resulting auditor’s opinion expressed on items being audited (a company’s financials, internal controls, or a system) can be candid and honest without it affecting daily work relationships within the company. Auditors evaluate each internal control deficiency noted during the audit to determine whether the deficiency, or a combination of deficiencies, is severe enough to be considered a material weakness or significant deficiency. In assessing the deficiency, auditors consider the magnitude of potential misstatements of your financial statements as well as the likelihood that internal controls would not prevent or detect and correct the misstatements.

Representation to Management

• In an audit of financial statements, professional standards require that auditors obtain an understanding of internal controls to the extent necessary to plan the audit.
• written confirmation from management to the auditor about the fairness of various financial statement elements.
• Auditors use this understanding of internal controls to assess the risk of material misstatement of the financial statements and to design appropriate audit procedures to minimize that risk.

The idea behind a management representation letter is to take away some of the legal burdens of delivering wrong financial statements from the auditor to the company. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. Internal auditors are employed by the company or organization for whom they are performing an audit, and the resulting audit report is given directly to management and the board of directors. Consultant auditors, while not employed internally, use the standards of the company they are auditing as opposed to a separate set of standards.

If the auditors detect an unexpected material misstatement during your audit, it could indicate that your internal controls are not functioning properly. Conversely, lack of an actual misstatement doesn’t necessarily mean that your internal controls are working.

The determination of whether an assertion is a relevant assertion is based on inherent risk, without regard to the effect of controls. Financial statements and related disclosures refers to a company’s financial statements and notes to the financial statements as presented in accordance with generally accepted accounting principles (“GAAP”). References to financial statements and related disclosures do not extend to the preparation of management’s discussion and analysis or other similar financial information presented outside a company’s GAAP-basis financial statements and notes.

External audits can include a review of both financial statements and a company’s internal controls. When a company’s financial statements are audited, the principal element an auditor reviews is the reliability of the financial statement assertions. In the United States, the Financial Accounting Standards Board (FASB) establishes the accounting standards that companies must follow when preparing their financial statements.

In an audit of financial statements, professional standards require that auditors obtain an understanding of internal controls to the extent necessary to plan the audit. Auditors use this understanding of internal controls to assess the risk of material misstatement of the financial statements and to design appropriate audit procedures to minimize that risk. written confirmation from management to the auditor about the fairness of various financial statement elements. The purpose of the letter is to emphasize that the financial statements are management’s representations, and thus management has the primary responsibility for their accuracy.

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This letter is useful for setting the expectations of both parties to the arrangement. Almost all companies receive a yearly audit of their financial statements, such as the income statement, balance sheet, and cash flow statement. Lenders often require the results of an external audit annually as part of their debt covenants. For some companies, audits are a legal requirement due to the compelling incentives to intentionally misstate financial information in an attempt to commit fraud.

Management representation letter

As long as there’s a reasonable possibility for material misstatement of account balances or financial statement disclosures, your internal controls are considered to be deficient. An auditor typically will not issue an opinion on a company’s financial statements without first receiving a signed management representation letter. An audit engagement is an arrangement that an auditor has with a client to perform an audit of the client’s accounting records and financial statements. The term usually applies to the contractual arrangement between the two parties, rather than the full set of auditing tasks that the auditor will perform. To create an engagement, the two parties meet to discuss the services needed by the client.

As a result of the Sarbanes-Oxley Act (SOX) of 2002, publicly traded companies must also receive an evaluation of the effectiveness of their internal controls. As noted above, an internal control letter is usually the result of a deficiency in internal controls discovered during the audit, most commonly from a material audit adjustment. The letter includes required language regarding the severity of the deficiency.

Real Business Owners,

The parties then agree on the services to be provided, along with a price and the period during which the audit will be conducted. This information is stated in an engagement letter, which is prepared by the auditor and sent to the client. If the client agrees with the terms of the letter, a person authorized to do so signs the letter and returns a copy to the auditor. By doing so, the parties indicate that an audit engagement has been initiated.

Also, the letter provides supplementary audit evidence of an internal nature by giving formal management replies to auditor questions regarding matters that did not come to the auditor’s attention in performing audit procedures. Some auditors request written representations of all financial statement items. All auditors require representations regarding receivables, inventories, plant and equipment, liabilities, and subsequent events. The letter is required at the completion of the audit fieldwork and prior to issuance of the financial statements with the auditor’s opinion.

Auditors spend a lot of time assessing how material audit adjustments and immaterial adjustments that have the potential to be material will be communicated in the internal control letter. The Representation Letter is issued with the draft audit and is required by auditing standards to finalize the audit. The Representation Letter is a letter from the Association to our firm confirming responsibilities of the board and management for the financial statements, as well as confirming information provided to us during the audit. The President or Treasurer and Management need to sign the Representation Letter and return it back to our office within 60 days from the date the draft audit was issued. Representation Letters received after the 60-day mark may result in additional auditing procedures in order to finalize the audit and comply with auditing standards at an additional expense to the Association.

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A management representation letter is a structure letter composed by an organization’s outer reviewers, which is marked by a senior organization the board. The letter verifies the precision of the financial reports that the organization has submitted to the examiners for their investigation. For samples of different letters, check out our collection of more representation letter templates on our official website template.net that you can use. You may also see more different types of representation   letters in Word from our official website template.net.

• Generally, the letter expresses that the entirety of the data submitted is precise and that all material data has been uncovered to the reviewers. The evaluators utilize this letter as a feature of their review proof. View a wider selection of Creative Letter   Templates right here.
• The letter likewise moves some fault to the board, on the off chance that things being what they are, a few components of the examined fiscal summaries don’t reasonably speak to the money related outcomes, monetary position, or incomes of the business.
• Consequently, the explanations that the reviewer remembers for the letter are very expansive extending, enveloping each conceivable zone in which the board’s failings could prompt the issuance of off base or deceiving budget summaries. Looking for more insights? Dive into our blog post about representative cover letter templates.
• The executives are answerable for the best possible introduction of the budget summaries as per the pertinent bookkeeping system. Find more Letter Format Templates by visiting this link.
• Every single money related record have been made accessible to the examiners
• All governing body minutes are finished
• The board has made accessible all letters from administrative organizations concerning monetary revealing resistance
• There are no unrecorded exchanges
• The net impact of every uncorrected misquote is insignificant
• The supervisory crew recognizes its duty regarding the arrangement of budgetary controls. You can also find a wider variety of management representation letters in Pdf format on our official website at template.net.
• All related gathering exchanges have been revealed; Explore a variety of Professional Letter Templates here.
• Every unforeseen risk have been revealed;
• All unasserted cases or evaluations have been revealed;
• The organization has revealed all liens and different encumbrances on its advantages;
• Every material exchange have been appropriately recorded;
• The board is liable for frameworks intended to distinguish and forestall extortion;
• The board has no information on misrepresentation inside the organization;
• The budget reports comply with the relevant bookkeeping system.
• Evaluators regularly don’t enable the administration to roll out any improvements to the substance of this letter before marking it, since this would successfully lessen the risk of the executives. Check out more Personal Letter Templates available here.
• An inspector regularly won’t give a supposition on an organization’s fiscal summaries without first getting a marked administration portrayal letter.
• An administration portrayal letter is a particular letter composed by an organization’s outer reviewers and afterward marked by the senior organization the executives. The date of the archive can’t be later than the date at which the review wraps up. The letter confirms that the data gave is precise and revealed to the examiners.
• On the off chance that for reasons unknown it’s discovered that a few components of the evaluated budget summaries are not exact then evaluators should lead further examinations. As you can envision, to state there’s a ton of strain to hit the nail on the head the first run-through is putting it mildly. You can also discover a greater variety of management representation  letters in Pages on our official website, template.net.
• All dangers, vulnerabilities, liens, encumbrances, unrecorded and recorded exchanges, legitimate infringement, unexpected liabilities, and unasserted cases or evaluations have been sufficiently recorded and uncovered.
• Every money related record has been made accessible to the evaluators. You may also see more on Business Letter templates here.
• All board and investor meeting minutes have been made accessible to the examiner.
• The executives are liable for frameworks intended to recognize and forestall extortion and have no information on misrepresentation inside the organization.
• The executives don’t expect to have changes that will affect the estimation of organization resources or liabilities.
• The board is answerable for the correct introduction of the fiscal reports by the relevant bookkeeping structure and the group recognizes its duty regarding the arrangement of money related controls.
• The board has made accessible all letters from administrative offices concerning money related detailing rebelliousness. For the best experience, explore a wider range of management representation  letters in Google Docs directly from our official website, template.net.

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Format of Management Representation Letter (MRL) for Audit

In this article author has shared the format of the Management Representation Letter or Written Representation (MRL/WR)  to be obtained from the management during various professional engagements:

M/s XYZ & Co.

Gurgaon, Haryana

Sub: Management Representation in course of Statutory Audit for F.Y. 2021-22 .

This representation letter is provided in connection with your audit of the financial statements of M/s Private Limited, Delhi for the year ended March 31, 20XX  for the purpose of expressing an opinion as to whether the financial statements are presented fairly, in all material respects, (or give a true and fair view) in accordance with the applicable accounting standards in India.

We confirm that (to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves):

Financial Statements

• We have fulfilled our responsibilities, as set out in the terms of the audit engagement, for the preparation of the financial statements in accordance with Financial Reporting Standards; in particular the financial statements are fairly presented (or give a true and fair view) in accordance with the applicable accounting standards in India.
• Significant assumptions used by us in making accounting estimates, including those measured at fair value, are reasonable.
• Related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the requirements of applicable accounting standards in India.
• All events subsequent to the date of the financial statements and for which applicable accounting standards in India require adjustment or disclosure have been adjusted or disclosed.
• The effects of uncorrected misstatements are immaterial, both individually and in the aggregate, to the financial statements as a whole.

Information Provided

• We have provided you with:

Access to all information of which we are aware that is relevant to the preparation of the financial statements such as records, documentation and other matters;

Additional information that you have requested from us for the purpose of the audit; and

Unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence.

• All transactions have been recorded in the accounting records and are reflected in the financial statements.
• We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud.
• We have disclosed to you all information in relation to fraud or suspected fraud that we are aware of and that affects the entity and involves:

Management;

Employees who have significant roles in internal control; or

Others where the fraud could have a material effect on the financial statements.

• We have disclosed to you all information in relation to allegations of fraud, or suspected fraud, affecting the entity’s financial statements communicated by employees, former employees, analysts, regulators or others.
• We have disclosed to you all known instances of non-compliance or suspected non-compliance with laws and regulations whose effects should be considered when preparing financial statements.
• We have disclosed to you the identity of the entity’s related parties and all the related party relationships and transactions of which we are aware.

For and on Behalf Board of Directors

For any inquiry you may write us on:  [email protected]

Disclaimer:  The information provided by the author in the article is for general informational purposes only. All information provided is in the good faith, however we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information in the article.

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Name: CA. Ramanujan Sharma

Qualification: ca in practice, company: n k r s & co (chartered accountants), location: gurugram, haryana, india, member since: 25 apr 2022 | total posts: 16, my published posts, join taxguru’s network for latest updates on income tax, gst, company law, corporate laws and other related subjects..

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The Role of Management Representation Letters in Audits

Explore the significance of management representation letters in audits, their preparation process, and common misunderstandings in this insightful overview.

Audits are a critical component of financial transparency and corporate governance. Within this process, management representation letters play an essential role that often goes unnoticed by those outside the accounting profession.

These documents serve as a written assertion from company management regarding the accuracy and completeness of information provided to auditors. Their importance cannot be overstated, as they underpin the trust and integrity of the entire audit process.

Purpose of Management Representation Letters

Management representation letters serve as a formal attestation from a company’s executives to the auditors, confirming the veracity of the financial statements and disclosures. These letters are a professional necessity, providing auditors with assurances that all relevant information has been disclosed. They are a testament to the management’s confidence in their financial reporting and their commitment to transparency.

The letters also support the auditor’s assessment of the risk of material misstatement in the financial statements. By obtaining written confirmations, auditors can reduce the extent of substantive testing required, which can streamline the audit process. This efficiency is beneficial for both the auditors and the company being audited, as it can lead to a more focused and timely audit.

Moreover, these letters can be a safeguard against potential disputes or legal issues that may arise post-audit. In instances where inaccuracies are discovered after the audit has been completed, the letter serves as a record that management had affirmed the completeness and accuracy of the information at the time of the audit. This can be particularly important in cases where financial statements are later found to be fraudulent or misleading.

Preparing a Management Representation Letter

The preparation of a management representation letter is a meticulous process that requires careful attention to detail and a comprehensive understanding of the company’s financial affairs. It is a collaborative effort between management and auditors to ensure that all significant information is accurately reflected.

Necessary Statements Identification

Identifying the necessary statements to be included in the management representation letter is a foundational step. These statements typically cover a range of areas such as the acknowledgment of responsibility for the fair presentation of financial statements in conformity with the applicable financial reporting framework, confirmation of the completeness of the information provided, and the disclosure of any subsequent events that may affect the financial statements. Management must also confirm that they have made the auditors aware of all known instances of fraud or suspected fraud affecting the company. The identification process is guided by professional auditing standards, such as those issued by the American Institute of Certified Public Accountants (AICPA) or the International Auditing and Assurance Standards Board (IAASB).

Information Completeness

Ensuring the completeness of information in the management representation letter is paramount. This involves a thorough review of the company’s financial records and disclosures to verify that all relevant information has been included. Management must confirm that all transactions have been recorded and are reflected in the financial statements. They must also attest to the appropriateness of the accounting policies applied and whether any unrecorded liabilities exist. This step is critical as it directly impacts the credibility of the financial statements and the audit’s outcome. The completeness of information also extends to the disclosure of any related party transactions and the effects of any uncorrected misstatements identified during the audit.

Review and Approval

The final step in preparing a management representation letter is the review and approval by the company’s top executives, typically the CEO and CFO. This review process is not merely a formality; it is an active examination to ensure that the letter accurately reflects the company’s financial position and that all statements can be substantiated. The approval signifies that management has taken ownership of the representations made within the letter. It is also an opportunity for management to discuss any concerns or clarifications with the auditors before the letter is finalized. The signed letter is then dated as of the last day of fieldwork, signifying that the representations are relevant and up-to-date with the findings of the audit.

Misconceptions About Representation Letters

A common misunderstanding about management representation letters is that they are a mere formality, a routine sign-off without substantial impact on the audit’s outcome. This view underestimates the letter’s function as a document that auditors rely upon for assurance beyond the financial data and records they examine. It is not simply a procedural step, but a declaration that can have legal implications for the signatories, particularly if it is later found that the information provided was knowingly false or misleading.

Another misconception is that the letter is solely for the benefit of the auditors. While it is true that auditors use these letters to corroborate information and reduce audit risk, the benefits extend to the management and the company as well. The process of preparing the letter encourages a comprehensive review of the company’s financial disclosures, which can lead to the identification and rectification of errors before the audit is finalized. This proactive approach can enhance the quality of financial reporting and potentially prevent future financial discrepancies.

There is also a belief that once the letter is signed and the audit is complete, the responsibilities of management in relation to the representations made are concluded. However, the representations have a lasting effect, as they are a testament to the financial condition of the company at the point of the audit. Should any issues arise from the period covered by the audit, the representations made can be scrutinized for their accuracy and completeness.

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03 Apr What are Management Representation Letters?

In the world of assurance engagements, a management representation letter is a formal document that represents management’s agreement with the financial statements that are being audited or reviewed. This letter is a critical part of the assurance engagement process and is required by the auditor or reviewer as evidence that management acknowledges and accepts responsibility for the financial statements.

A management representation letter is typically issued by senior management, such as the CEO or CFO, and is addressed to the CPA firm performing the audit or review. It contains a series of statements that confirm certain facts and assurances about the company’s financial information, including the completeness and accuracy of financial records, disclosures of relevant information, and adherence to accounting principles.

The letter serves several purposes, including:

• Confirming the accuracy of financial information : The management representation letter is used to confirm that the financial statements are accurate and complete. This helps provide assurance to stakeholders that the financial statements are reliable.
• Demonstrating management’s responsibility : By signing the letter, management acknowledges its responsibility for the accuracy and completeness of the financial statements. This helps to provide accountability and transparency to stakeholders.
• Providing evidence for auditors and reviewer s: The management representation letter provides evidence to the CPA firm that management has taken responsibility for the financial statements, which helps to support the audit opinion or review conclusion.
• Reducing the risk of misstatements : The letter helps to reduce the risk of misstatements by requiring management to review the financial statements and provide assurance that they are accurate and complete.

Overall, the management representation letter is a critical part of the assurance engagement process, as it helps to provide assurance that the financial statements are accurate and complete, and that management takes responsibility for them. Without this letter, CPA firms would not have the necessary evidence to support their opinions and conclusions, which could lead to a lack of confidence in the financial statements and potential legal and financial consequences for the company. In fact, CPA firms are not permitted to complete their engagement and issue an audit or review engagement report until management provides a signed management representation letter.

If you require an audit or review and would like to speak to someone about these processes, please contact us to set up a free consultation.

Annelie Vistica

Cpa, ca – principal.

Annelie Vistica, a Principal at Clearline, is a CPA and CA with a strong background in private enterprise and assurance. With a Bachelor of Accountancy from the University of Stellenbosch in South Africa and extensive experience in tax, Annelie brings expertise in business setup, growth planning, and estate transitioning. She is passionate about engaging with clients to support them through various business stages, from inception to succession planning. Annelie values the supportive environment at Clearline, where she appreciates colleagues’ assistance in tax and assurance. Outside work, she enjoys spending time with her family and dog, exploring nature, visiting family in the Okanagan, and travelling the world.

Jennifer Scott

Cpa, cga – senior manager.

Jennifer Scott, a Senior Manager at Clearline brings a wealth of expertise in Private Enterprise and Assurance, holding designations as a CPA and CGA. Jennifer’s focus at Clearline includes conducting reviews, compilations, and providing tax services tailored to owner-manager businesses and partnerships, with a keen interest in industries such as professionals, manufacturing, real estate, and services. Her commitment to exceptional client service is evident through her proactive approach to staying updated on evolving accounting standards and tax legislation, thereby making her clients’ lives easier Jennifer’s educational background includes a Bachelor of Commerce from UBC with a major in Accounting, followed by over 15 years of experience in public practice, specializing in private enterprise. She appreciates the supportive environment at Clearline and enjoys various activities outside of work, including travelling, cheering on her children in sports like soccer, baseball, and volleyball, indulging in long walks with her dog while listening to podcasts, spending quality time with loved ones, and exploring her passion for baking through experimenting with new recipes.

Charmaine Pirrie

Cpa, ca(sa) – senior manager.

Charmaine Pirrie, a Senior Manager at Clearline is a CPA and CA (SA) with a background in audit and review engagements. With experience from Grant Thornton and D&Co, she brings expertise in private company audits and values Clearline’s supportive environment and technical resources. Charmaine also finds fulfillment in delving into her clients’ businesses to provide tailored services, ensuring meticulous audit and review procedures. Outside of work, she enjoys spending time with family, going for walks, and swimming.

Deepeka Dhillon

Cpa – manager.

Deepeka Dhillon, a Manager at Clearline, holds a CPA designation with a focus in Private Enterprise and Tax. Her primary responsibilities include compliance, corporate restructuring, and, estate and succession planning. Deepeka’s passion lies in continuous learning, enabling her to provide tailored solutions to clients’ unique needs. With a CPA designation and completion of the CPA in-depth tax program, she brings a strong educational background to her role at Clearline. Deepeka values the countless opportunities at Clearline to expand her knowledge in the complex world of tax. Outside work, she enjoys spending time with her beloved Jack Russell Terrier, Opie.

Raj Momrath

Cpa, ca, senior tax manager.

Raj Momrath, a Senior Tax Manager at Clearline, is a CPA, CA specializing in Canadian Tax. With a focus on Canadian tax planning, corporate reorganizations, estate planning, and providing business advice, Raj caters to a diverse clientele, including small owner-manager companies, high-net-worth individuals and large privately held multinational firms. His passion lies in helping Canadian owner-manager businesses and their shareholders minimize their overall tax obligations while navigating disputes with the Canada Revenue Agency and ensuring compliance with the complex Canadian tax system. Raj’s professional journey includes prior experience in PwC’s tax group, where he obtained his Chartered Accountant designation and then some time at some mid-sized firms. Raj completed the CPA Canada InDepth Tax course in 2017 strengthening his knowledge of Canadian tax. At Clearline, Raj appreciates working alongside knowledgeable colleagues and enjoys spending quality time with his wife and two sons and attending and volunteering with their sports activities. In his leisure time, Raj indulges in barbequing, golfing, and spending time outdoors, finding relaxation and enjoyment in these pursuits.

Julia Wallis

Julia Wallis, a Senior Manager at Clearline, holds designations as a CPA, CGA, and also holds a BA. Working within the Private Enterprise Group, her primary focus revolves around assisting entrepreneurs in understanding their personal and business finances while ensuring compliance with tax reporting requirements. Julia finds fulfillment in learning about her clients’ businesses and providing financial insights to enhance their management effectiveness while optimizing tax strategies. With a diverse career spanning various companies and public practice roles, including as a controller, Julia’s progression has equipped her with invaluable skills and insights into different business operations. She chose Clearline for its respected partners and staff, aligned philosophy on client service, and flexibility to balance demanding tax filing periods with leisure time for travel and personal interests such as gardening, wine exploration, reading, and relaxation.

Bilal Kathrada

Cpa, ca, principal.

Bilal, a Principal at Clearline Chartered Professional Accountants, primarily focuses on income tax and succession planning for Canadian owner-managed businesses in various industries. Bilal received his Bachelor of Commerce degree from the University of Victoria and obtained his CA designation in 2005.

Prior to Clearline, he worked in the tax group of a large international accounting firm in Vancouver and a mid-sized accounting firm located in the Fraser Valley.

Outside of the office, he enjoys spending time with his wife and three children. He enjoys outdoor activities such as golf and spending time with his family and friends.

Danny Sandhu

Cpa, manager.

Bio coming soon.

Shehzel Saif

Cpa, tax manager.

As Clearline’s Tax Manager, Shehzel focuses on tax planning, corporate reorganizations and succession and estate planning. She’s passionate about continuous learning and staying up to date on tax legislation changes and helping clients with succession. In addition to her CPA designation, Shehzel also has a Bachelor of Business Administration and has completed the CPA In-Depth Taxation Program. Outside of work, she enjoys spending time with family and friends, traveling and trying out new recipes.

Ameeta Randhawa

As Clearline’s HR Manager, Ameeta supports our firm’s greatest resource—our staff. With a Bachelor of Business Administration in Human Resources and over 7 years of HR experience in various industries, she ensures all employees have a positive experience at Clearline. Ameeta’s focuses include recruitment, performance management, employee relations, program and policy development, and employee engagement. Outside of work, she enjoys traveling and spending time with friends and family.

CPA, CA, Senior Manager

Michael is a Senior Manager in Private Enterprise, carrying out reviews, compilations, and tax services for small- to medium-sized businesses. With a Bachelor of Commerce specializing in finance and a Diploma in Accounting, backed by over a decade of accounting experience, Michael is a trusted advisor who helps clients’ businesses succeed. Outside of the office, Michael enjoys spending time with family, trying out different restaurants in the city, and building and collecting mechanical keyboards.

CPA, CGA, Manager

Victor K. Yoshida

Victor was born and raised in Vancouver and obtained his Bachelor of Commerce from the University of British Columbia. He articled with Deloitte & Touche and received his CA designation in 1984. Victor was accepted to the firm’s tax group and went on to complete the Canadian Institute of Chartered Accountants In-Depth Tax course.

Victor specializes in Canadian income tax issues for professional and owner-managed businesses. He has extensive experience with business succession, estate planning, wealth preservation issues, corporate reorganizations, as well as mergers and acquisitions.

Victor was a member of the education committee of the Institute of Chartered Accountants of British Columbia and has held executive positions with various amateur sport organizations.

In his free time, Victor enjoys training for marathons, travelling, and spending time with his family.

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Creating a Representation Letter

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Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom. Also note: This is not legal advice.

Introduction

Drafting a representation letter is an essential step in the legal process. Failure to do so can lead to a misunderstanding between parties, leaving one or both at risk of potential legal repercussions. Representation letters clearly outline the roles and responsibilities of each party involved and ensure that the individual or business being represented understands their rights, obligations and scope of authority. What’s more, these letters also protect against any legally-binding mistakes made by the representative during the course of their work.

At Genie AI, our team have developed a vast community template library which holds millions of data points which inform our AI as to what constitutes a market-standard representation letter. With our library, anyone can quickly draft and customise high quality legal documents without paying for costly lawyer fees - it’s open source! Our simple yet comprehensive guide provides step-by-step guidance on how to create your own representation letter using our template library; so you can trust you’re getting it right every time.

So if you’re looking for free representation letter templates with no strings attached – Genie AI is here for you. Read on below to get started with our step-by-step guide now and access our template library today!

Definitions (feel free to skip)

Legal Binding: A legally binding agreement is an enforceable agreement between two or more parties, which is legally recognized by a court of law.

Notarization: Notarization is a process that ensures the authenticity of a document and is typically done by a notary public.

Informed Consent: Informed consent is a process in which a person voluntarily agrees to participate in something after being fully informed of the risks, benefits, and other details of the activity.

Enforceable: Enforceable means that a legal agreement or contract is legally binding and can be enforced by the courts.

Explain the purpose of a representation letter and why it is important

Outline the key elements that should be included in the representation letter such as an introduction, a description of the agreement, the responsibilities of each party, the signatures of the parties, and any other details that may be necessary, describe the process of how to write and organize a representation letter, taking into account the legal aspects and the desired outcome, provide guidance on the formatting and layout of a representation letter, explain how to sign and date a representation letter, including the requirements for notarization and other legal measures, discuss how to ensure that the representation letter is legally binding and enforceable, such as by using specific language in the letter, list the documents, evidence and information needed to support a representation letter, such as witness statements or other forms of proof, explain when and how to use a representation letter in legal matters, and the types of situations that require a representation letter, detail the responsibilities of the representative and the individual or company represented, such as the obligations of each party and their rights with respect to the agreement, discuss the potential legal implications of not having a representation letter in place, such as the consequences of not meeting legal requirements, provide recommendations for how to ensure that a representation letter meets all legal requirements, summarize the key points of the article, get started.

• Understand what a representation letter is - it is a document that is signed by two parties to confirm the agreement they have made and the rights and responsibilities of each party
• Learn why representation letters are important - they provide a legal and binding agreement between the parties involved, and ensure that all parties are aware of the terms of the agreement
• Understand the consequences of not using a representation letter - without a representation letter, there is no written record of the agreement, which could lead to disputes and misunderstandings between the parties involved.
• Introduction: Introduce the purpose of the representation letter, the parties involved and their roles.
• Description of Agreement: Outline the details of the agreement, including the scope of the representation, the terms, and any other relevant information.
• Responsibilities of Each Party: Describe the duties and responsibilities that each party has in the agreement.
• Signatures of the Parties: Include the signature of each party on the letter.
• Other Details: Include any other details that may be necessary to clarify the agreement, such as timelines, deadlines, or any other special conditions.

When you can check this off your list and move on to the next step:

• Once all of the key elements have been outlined in the representation letter, you can move on to the next step in the guide.
• Start by outlining the scope of the representation. What are the legal rights and responsibilities of each party?
• Include an introduction that outlines the purpose of the representation letter and how it will be used.
• Identify the parties involved in the agreement.
• Provide a full description of the agreement, including any conditions or restrictions.
• Identify any potential risks or liabilities associated with the agreement.
• List out all the responsibilities of each party, including any obligations or duties.
• Include a signature line for each party at the bottom of the letter.
• Proofread the letter and make sure all information is correct and accurate.

When you have completed this step, you should have an organized representation letter that clearly outlines the scope of the agreement and the rights and responsibilities of each party.

• Begin the letter with the date and the recipient’s name and address
• Include a salutation, such as “Dear [Name],”
• Write out the purpose of the letter in the opening sentence
• Explain the purpose and the desired outcome of the letter in detail
• Include any relevant legal information that may be necessary
• Make sure to include all of the pertinent facts and evidence to provide clarity
• End the letter with a formal closing, such as “Sincerely,”
• Sign and date the letter
• Make sure to include any additional information, such as a notarization or other legal measures

When you have completed the formatting and layout of your representation letter and it includes the necessary information, you can check this step off your list and move on to the next step.

• Have all parties signing the letter present at the same time in front of a notary public
• Each party should sign the letter in the presence of the notary
• Every signing party should also provide a valid form of identification
• The notary should also sign and date the letter
• Once all parties have signed and the notary has notarized the letter, it is legally binding
• After completing the steps above, you can be sure that the letter is valid and enforceable
• Now you can move on to the next step in the guide.
• Research the legal requirements and regulations in your jurisdiction to make sure the representation letter is legally binding
• Use precise and unambiguous language when drafting the letter, such as stating the exact obligations of each party
• Ensure the letter clearly outlines the roles, rights, and obligations of each party
• Include a signature line for both parties and make sure each signature is witnessed and notarized
• Check that the letter is dated accurately
• Once you have completed the steps above, you can be sure that the representation letter is legally binding and enforceable
• Gather any documents that will be used as evidence, such as contracts, agreements, or other documents that are relevant to the case.
• Collect any witness statements, including any written or verbal statements from people who can provide proof in the case.
• Assemble any other forms of proof, such as photographs, recordings, or other physical evidence.
• Make sure all information is organized and accessible for use in the representation letter.

Once you have collected all documents, evidence, and information, you can check this step off your list and move on to the next step.

• Understand the purpose of a representation letter. It is a document used to enter into an agreement between an individual or company and their representative.
• Learn the types of legal matters that require a representation letter. These may include negotiations, contract disputes, court proceedings, and more.
• Research the laws and regulations that apply to the specific situation. This will help you know what must be included in the representation letter.
• When you have gathered the necessary information and documents, you can proceed to drafting the representation letter.
• When the letter is written and signed, it is ready to be used in the legal proceeding.

You will know you have completed this step when you have gathered all the necessary information and documents, and have drafted the representation letter.

• Brainstorm and list out all of the responsibilities and obligations that the representative and the individual or company they are representing should fulfill
• Make sure to include the individual or company’s rights with respect to the agreement in the representation letter
• Review the list of responsibilities and obligations and make sure that all parties involved are comfortable with the terms
• Once all parties have agreed to the terms, add the details to the representation letter
• When the representation letter is complete, have all parties involved sign it
• Once all parties have signed the representation letter, it is legally binding and enforceable
• You will know this step is complete when all parties have signed the representation letter and the document is finalized.
• Research and understand the legal requirements for the representation letter, and the potential risks and consequences of not meeting these requirements.
• Consider the potential risks of not having a representation letter in place, such as enforcement of contract terms, liability for damages, or penalties for breach of contract.
• Consult a lawyer or other legal expert to ensure that you are aware of all the potential legal implications of not having a representation letter in place.
• Once you have a thorough understanding of the potential legal implications of not having a representation letter in place, move on to the next step.

• Draft the representation letter with a clear and concise legal language, making sure all the parties involved are named and referenced. • Ensure that the agreement is signed by all the parties involved, or their representatives. • Make sure that the agreement contains a specific and detailed description of the services or goods to be provided, including a timeline and payment structure. • Include clauses that detail the legal consequences of a breach of contract and dispute resolution. • Ensure that the letter is written in accordance with the applicable laws of the jurisdiction where the agreement is to be made. • Check that the agreement is clear and unambiguous, with no room for interpretation. • Check that the agreement is legally binding and that all parties have read and understood the contents.

You can check this off your list and move on to the next step once you have completed the above steps to ensure that the representation letter meets all legal requirements.

• Gather all relevant information needed for the representation letter, including the client’s name, address, and the reasons why legal representation is needed. • Make sure that the representation letter is written in a clear and professional manner, with all legal requirements stated clearly. • Ensure that the representation letter adheres to the laws of the state or jurisdiction where the representation letter is being used. • Include all relevant details that are necessary for the document, such as names, signatures, dates, and any other relevant information. • Double check that all the necessary information has been included and that the representation letter meets all legal requirements.

Once you have gathered the necessary information and double checked that the representation letter meets all legal requirements, you can check this off your list and move onto the next step.

Q: What is the difference between a representation letter and a legal opinion?

Asked by Sarah on October 1st, 2022. A: A representation letter is an agreement between two parties, while a legal opinion is an interpretation of the law given by a lawyer. A representation letter typically outlines the responsibilities of both parties, confirms the terms of an agreement, and makes any necessary representations about the accuracy of information or the ability of one party to perform its obligations. A legal opinion, on the other hand, is an analysis of applicable law which assesses the legal risks associated with a particular transaction or situation. It is often used to provide guidance on how to proceed in a certain situation.

Q: When do I need a representation letter?

Asked by James on December 12th, 2022. A: Representation letters are typically used to provide written confirmation that certain terms have been agreed upon between two parties. This can be useful when there may be a dispute in the future as to what was agreed upon. Representation letters can also be used to confirm that all necessary information has been disclosed and that all parties understand each other’s responsibilities. Representation letters can be used in many different contexts including contracts, investments, mergers and acquisitions, and joint ventures.

Q: What should be included in a representation letter?

Asked by Elizabeth on April 4th, 2022. A: A representation letter should include all relevant details about the two parties involved in the agreement and their respective roles and responsibilities. It should also include any representations made by either party about the accuracy of information or their ability to perform their obligations. Additionally, it should clearly state all agreed upon terms and conditions.

Q: How do I draft a representation letter for my business?

Asked by Michael on January 14th, 2022. A: Drafting a representation letter for your business should begin with understanding your specific needs and what you are trying to achieve with your document. You should then consider what types of representations you need to make, who will be involved in the agreement, and what types of terms and conditions need to be included. Once you have these details determined, you can begin drafting your representation letter using templates or software tools available online.

Q: How do I sign a representation letter?

Asked by Jessica on May 9th, 2022. A: The signing process for a representation letter will depend on the specific document requirements set out by your jurisdiction and applicable laws. Generally speaking, both parties must sign the document in order for it to be legally binding. Depending on your jurisdiction and applicable laws, this may require an original signature by each party or simply an electronic signature via an appropriate software tool or service provider.

Q: What are some common pitfalls when creating a representation letter?

Asked by Joshua on August 22nd, 2022. A: One common pitfall when creating a representation letter is not being clear enough about each party’s obligations or expectations from the agreement. It’s important to ensure that all relevant details are explicitly stated in order to avoid any potential misunderstandings or disputes down the road. Additionally, you should ensure that any representations made by either party are accurate and truthful as this could have legal implications if false information is provided. Finally, you should ensure that all applicable laws are taken into account when drafting your document in order to ensure compliance with those laws and regulations.

Q: What are some best practices when creating a representation letter?

Asked by Emily on November 17th, 2022. A: When creating a representation letter it’s important to ensure that all relevant details are explicitly stated so as to avoid any potential misunderstandings or disputes down the road. Additionally, it’s important to ensure that any representations made by either party are accurate and truthful as this could have legal implications if false information is provided. You should also ensure that all applicable laws are taken into account when drafting your document in order to ensure compliance with those laws and regulations. Finally, it’s important to take into account any potential unforeseen circumstances which could arise from your agreement so as to ensure that these situations are covered in your document if they occur in the future.

Q: Is there a difference between UK vs USA vs EU jurisdictions when creating a representation letter?

Asked by Hannah on February 23rd, 2022. A: Yes – there may be differences between jurisdictions when it comes to creating a representation letter depending on which country’s laws apply to your situation or agreement. Generally speaking though there are some common elements which must be included such as clearly stating each party’s obligations and ensuring that all applicable laws are taken into account when drafting your document in order to ensure compliance with those laws and regulations regardless of jurisdiction. Additionally, it’s important to check if there are any specific requirements under local law which must be taken into account when creating your document as well as ensuring that any representations made by either party are accurate and truthful as this could have legal implications if false information is provided regardless of jurisdiction too.

Q: Is it possible for me to create my own representation letter without involving an attorney?

Asked by Matthew on June 28th, 2022. A: Yes – it is possible for you to create your own representation letter without involving an attorney depending on the complexity of your situation or agreement as well as any specific requirements set out under local law which must be taken into account when creating your document. However it’s important to note that using an attorney may provide additional benefits such as providing advice regarding applicable legal risks associated with your particular transaction or situation as well as ensuring that all necessary information has been disclosed accurately and truthfully before signing off on any agreement or contract .

Q: Are there different types of representation letters I can create?

Asked by John on July 12th, 2022 A: Yes – there are different types of representation letters depending on what type of agreement you need for your particular situation or transaction such as contracts, investments, mergers & acquisitions, joint ventures etc… Each type of agreement will require different elements such as outlining each party’s roles & responsibilities as well as confirming all agreed upon terms & conditions etc… It’s important to understand what type of agreement you need before beginning drafting process so as make sure all necessary elements are included in order for it be legally binding if required later down the line .

Q: Can I use online services or software tools available online help me create my own representation letter?

Asked by David on September 18th 2022 A: Yes – there are online services available which can help you create your own representation letter depending on what type of agreement you need for your particular situation or transaction such as contracts, investments mergers & acquisitions , joint ventures etc… These services typically provide templates which allow you fill out relevant details about both parties involved in agreement such their roles & responsibilities , confirm agreed upon terms & conditions etc… Additionally , some services also allow you sign electronically via appropriate software tool or service provider .

Q: Does every industry have its own specific laws regarding creating a representation letter?

Asked by Ashley on March 8th 2022 A: No - not necessarily - while certain industries may have laws specific to them regarding creating a representation Letter , generally speaking most agreements will require same elements such outlining each party’s roles & responsibilities confirming terms & conditions etc… However , it’s important check whether there are any specific industry requirements need taken into account depending upon business model ( e . g . SaaS , technology , B2B ) , sector , jurisdiction etc… before beginning drafting process .

Example dispute

Suing a company over a representation letter.

• A plaintiff may sue a company for damages if they believe that the company has made false or misleading representations in a representation letter.
• The plaintiff must prove that the representations were false and that the company acted negligently or recklessly.
• The plaintiff must also show that the representations caused them to suffer some kind of financial loss or other harm.
• The plaintiff may be entitled to damages such as lost profits, attorney’s fees, or other costs associated with the lawsuit.
• The plaintiff may also seek an injunction or other equitable relief if the representation letter has caused irreparable harm.
• The court may also require the company to issue a corrective representation letter if the company has made false or misleading representations.

Templates available (free to use)

Rule 144 Seller S Representation Letter Non Affiliate Sale Of Restricted Securities Sas 72 Representation Letter

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Detailed Format of a Management Representation Letter

Format of a management representation letter (mrl).

Chartered Accountants Dear Sirs, This representation letter is provided in connection with your audit of the financial statement of M/s. …….for the year ended 31st March 2020 for the purpose of expressing an opinion as to whether the financial statements give a true and fair view of the financial position of M/s. …….as of 31st March 2020 and of the results of operations for the year then ended. We acknowledge our responsibility for the preparation of financial statements in accordance with the requirements of the other relevant statute and recognized accounting policies and practices, including the accounting standards issued by The Companies Act 2013/ The Institute of Chartered Accountants of India.

We confirm, to the best of our knowledge and belief, the following representations; General ___________________________ 1. Ours ‘…….is a limited company incorporated under the Companies Act, 1956/2013 bearing Regn. No CIN: ……………..dated …….. as Private Limited Company and converted into Public Limited Company on ………….. A copy of the Memorandum & Articles of Association is already with you. 2. Following persons are the members of the Board of Directors of the Company as on date:- Name of Director:- Designation;- Director Date of appointment Name of Director:- Designation; – Director Date of appointment Name of Director:- Designation; – Director Date of appointment Name of Director:- Designation;- Director Date of appointment Name of Director:- Designation;- Director Date of appointment 3. The Company has obtained all registrations/licenses required to run the business. 4. So far the Company had filed I.T. Return for the FY ending March …… No income tax return has been filed by the Company after the AY . PAN of the Company is ……. There are no demands/ appeals pending or details of appeals/demands pending are as under:- All the Statutory Compliance like VAT, Service Tax, GST, PF, ESIC, etc, has been paid timely and there is no default there, except the following:

5. We have maintained the following books of account:-

(a)Cash book (b) Bank Book (c) Ledger (d) Journal All the books have been kept on the computer and printouts are taken on a monthly/yearly basis as per needs. All the aforesaid books have been kept and maintained at the corporate office of the Company. 6. We enclose herewith a copy of final accounts for the year-ended ……… duly approved by the Board of Directors of the Company, for your perusal and doing the needful.

Related Topic: Private Company – Specimen Audit Report March 2020

7. Significant Accounting Policies

a) Basis of preparation The financial statements are prepared on an accrual basis under the historical cost convention, in accordance with the generally accepted accounting principles (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year. b) Use of estimates The preparation of financial statements in conformity with the Indian GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known/materialize. c) Revenue recognition Revenue is recognized on an “accrual” basis at the fair value of the consideration received or receivable net of applicable taxes, trade discounts, and customer returns. d) Secured Loans 1) The term loan from Financial Institutions i.e. ……….. are secured by the first charge ranking parri-passu in each case with the others by way of Equitable Mortgage by the deposit of the deeds in respect of the land situated ………………………. & by hypothecation of all the movable (save and except book debts) including immovable machinery, spares & accessories, Both present and future, subject to prior charge created in favour of the company’s banker on stock of raw material, semi-finished goods, finished goods & consumable stores and book debts for securing the cash credit for the working capital requirement. 2) All loans are guaranteed by all the promoters/shareholders of the company. e) Fixed assets Fixed assets are carried at cost less accumulated depreciation and impairment losses if any. The cost of fixed assets includes interest on borrowings attributable to the acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. f) Depreciation / amortization All the Company’s fixed assets including Intangible assets are depreciated on the basis of the Written Down method over the estimated useful life of the asset as per the provisions of the Companies Act, 2013. Leasehold improvements, Office Equipments, Furniture & Fixtures & Software are amortized over the useful life of the assets as specified under Company’s Act 2013. g) Foreign exchange transactions Transactions in foreign currency are recorded in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency prevailing on the date of the transaction. Monetary items denominated in foreign currency are restated at the rates prevailing on the balance sheet date. Non-monetary items denominated in foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transaction. Exchange differences arising on the settlement of monetary items or on reporting company’s monetary items at rates different from those at which they were initially recorded during the year or reported in the previous financial statements are recognized as income or expense in the year in which they arise. h) Earnings per share Basic earnings/loss per share is calculated by dividing net profit/loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. i) Taxation Tax expense comprises current tax and deferred tax. Current tax is determined as the amount of tax payable in respect of taxable income for the year. The provision for current income-tax is recorded based on assessable income and the tax rate applicable to the relevant assessment year. Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in the guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT credit entitlement. The Company is carrying/carrying any business since …….. Income Tax Returns have been/not been filed from AY ……. There is no reasonable certainty of the realization of future profits based on the Profits & Loss Account of the earlier years. Therefore, no provision for Deferred Tax has been made under the prevailing circumstances. j) Investments: Long term investments are carried at cost after providing for any diminution in value if such diminution is of a permanent nature. Current investments are carried at lower of cost or market value. k) Loans & Advances Security deposits with of Rs. – will be adjusted by the …………… against the outstanding bill ………………………..hence not recoverable. l) Inventories: There are no inventories in the Balance Sheet. m) Borrowing Cost: Interest and other financing costs relating to borrowed funds attributable to the construction or acquisition of fixed assets have been capitalized to the extent if they relate to the period up to which the asset was ready to use (As per AS-16). All other borrowing costs are charged to revenue. n) Employee Benefits:

LEAVE ENCASHMENT

There are ………/s no employee. Accordingly, provisions have been made as per AS-15../hence this clause is not applicable. PROVIDENT FUND REgular in payment of dues/There is no employee hence this clause is not applicable. GRATUITY There are …… employees/is no employee hence this clause is not applicable. Provision made on the basis of actuarial valuation o) CONTINGENT LIABILITIES: A) Corporate Guarantees B)Capital Commitments .. The company has become a sick company within the meaning of clause (o) of sub-section 1 of section 3 of the sick industrial companies (special provision) act, 1985. The matter under consideration at BIFR/AIIFR for the revival process has been rejected by the Hon’ble BIFR. The interest of Rs…………. has not been provided on the term loans of …………..because OTS (ONE TIME SETTLEMENT) has been revoked due to nonpayment as per the OTS scheme. However, interest has been provided on the term loan of ……………… as per OTS Settlement and statement of account provided by the ……………….. B) The sales tax authorities have raised a demand of Rs ………………………The above demand is not acceptable and it has been challenged by the Company in Appeal. The appeal is pending before the authorities. Although the company has provided a liability of Rs. …………- in the books of accounts but from the prevailing circumstances the amount of Rs. ……………… appears to be a contingent liability.

8 NOTES ON ACCOUNTS

Micro and Medium Scale Business Entities: There are no Micro, Small, and Medium Enterprises, to whom the company owes dues which are outstanding for more than 45 days as at 31st March 2020. This information as required to be disclosed under the Micro, Small and Medium Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. B The Company is a Small and Medium-Sized Company (SMC) as defined in the General Instructions in respect of Accounting Standard notified under the Companies Act, 2013, accordingly, the company has complied with the accounting standard as applicable to a Small and Medium-Sized Company. C In the absence of confirmation from the parties the debit & credit balances in respect of Security Deposits and have been taken as reflected in the books. Balance appearing under the heads Current Assets, Loans and Advances, and Current Liabilities are subject to confirmation. D In the opinion of the Board of Directors of the company, the current assets, loans, and advances have the value at least equal to the figures stated in the Balance Sheet on realization in the ordinary course of business and provision for all determinable/known liabilities have been made in the accounts when reliable estimates can be made of the amount of obligation. F Previous year Figures have been reworked, regrouped, re-arranged, and reclassified wherever considered necessary to make them comparable with current year’s figures. G There has been no default except Default of Principal repayment and interest repayment on Long Term Borrowings from ……………….. The figures have been quantified in the balance sheet.

i. There have been no irregularities involving management or employees who have a significant role in the system of internal control that could have a material effect on the financial statements. ii. The financial statements are free of material misstatements, including omissions. iii. We have complied with all the relevant provisions of the statute as applicable to us and our records and minutes in this respect are up to date and are open for inspection in the course of your audit. iv. The company has complied with all aspects of contractual agreements that could have a material effect on the financial statements in the event of noncompliance. There has been no non-compliance with requirements of regulatory authorities that could have a material effect on the financial statements in the event of non-compliance. v. We have no plans or intentions that may materially affect the carrying value or classification of assets and liabilities reflected in the financial statements. vi. All the loans or depositor repayment thereof was made by account payee Cheques or demand draft only. vii. In term of section 22 of the micro, Small & Medium Enterprises Development Act, 2006: Sundry Creditors of the Company: Rs.NIL Interest Paid to them: Rs. NIL viii. We have complied with tax provisions in respect of the deduction of TDS. ix. All the payments in the respect of any revenue item has been made in compliance with the provisions of section 40(A)(3) of the Income Tax Act 1961. x. Details of all immovable Properties Purchased/Sold during the years are as below: Details Purchase/Sale Amount Value as per stamp duty act NIL NA NA NA

10. General Affirmations

· The Cash balance as on 31/03/2020 has been physically verified by the management at Rs. · The company has not given any guarantee for loans taken by others from banks or financial institutions. · We confirm that no short-term funds have been employed for long-term purposes. · We confirm that during the year company has not issued any shares. · We confirm that during the year company has not issued any debentures to any person. · We confirm that during the year company has not raised funds from the public issue of shares. · None of the employees of the Company were in receipt of remuneration in excess of the limits specified under various provisions of the Companies Act, 2013. · We confirm that Company has duly complied all the provisions of Section 40(A)3 of the I.T. Act, 1961, read with Rule 6DD, and has not made any payment of expenditure in excess of Rs……./- in Cash. · We confirm that Company has duly complied all the provisions of Section 269SS and 269T of the I.T. Act, 1961 and has not taken/accepted and or repaid any loans or deposits in excess of limits prescribed under these sections otherwise them through account payee Cheques and or draft as the case may be. · No personal expenses have been charged to revenue accounts. · No fraud has been committed during the year.

11. Other Information of the company:

Email id: :- Principal Contact No :- No. Of Employees: :- persons No. of Branches:- NIL 12. Others: (a) Our Books of Accounts and Other Records are kept at the corporate address of the company. (b) A bonus amounting Rs. NIL /- was paid to employees which is of customary nature. For and on behalf of the Board ……. Place: New Delhi

A chartered Accountant and a Law Graduate having more than 30 years of experience. Founder of Tri Nagar Keshav Puram CPE Study Circle of NIRC of ICAI. Have organized learning sessions covering the Syllabus for Limited Insolvency Examination in different cities and forums in Northern India.

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• Representation to Management

Do you remember your school times? You may have written some leave applications. Also, during your college days, you would have written some letters. You had written application letters, letters for food quality of college mess, improving the furniture of classroom etc. To whom you had written these letters? Your principal, class teachers, or persons in responsibility. In the business world also, you need to write some letters to your management teams. You can write regarding your promotion, transfer, food quality in the canteen. Also, you can inform them about your leave. These are some of the management representation letters. In this section, we will study the management representation letter.

Browse more Topics under Inter Departmental Communication

• Correspondence with Branch Office

Management Representation Letter

A letter written to the management group from an individual is a management representation letter. The person within the organization writes the letter to the organization. It serves as a permanent record in an organization. Through the management representation letter, one can write their cause to the management. The various management representation letters are suggestions for transfers, representation against transfer, holiday leave, promotion letter etc.

The format of Management Representation Letter

There is a fixed format of a management representation letter.

The very part of the letter is Date. One should write the date in any format.

One should write the sender’s name and address after mentioning the date.

Below the sender’s details, one should write the receiver’s name and address.

One should clearly mention the reason for writing a letter.

It contains the words to greet the recipient. Proper greeting and salutation empresses the reader. One can use words like Dear, Respected or Sir/Ma’am etc.

Content or Body of the Letter

It is the main part of the letter. It includes the actual message of the sender. The main body of the management representation must be clear and simple to understand. A body of the letter is basically divided into three main categories.

Opening Part

The first paragraph of the letter must state the introduction of the writer.

This paragraph states the main idea or the reason for writing. It must be clear, concise, complete, and to the point.

Concluding Part

It is the conclusion of the letter. It shows the suggestions or the need of the action. The closing of the letter shows the expectation of the sender from the recipient. Always end the letter by courteous words like thanking you, warm regards, look forward to hearing from your side etc.

Complimentary Close

It is a humble way of ending a letter. It is written in accordance with the salutation. The most generally used complimentary close are Yours faithfully, Yours sincerely, and Thanks & Regards.

Signature and Writer’s Identification

It includes signature, name, and designation of the sender. It can also include other details like contact number, address etc. The signature is handwritten just above the name of the sender.

Points to Remember

A management representation letter is a request letter. There are some important points related to it. Let us get ourselves familiar with them.

• The tone for writing this letter is polite.
• The content must be clear and to the point.
• Avoid slags and abbreviation.
• One should use formal and straightforward words and language.

Solved Example for You

Problem: A person writes a management representation letter. What are the possible ways in which the management can reply to them?

Solution: The management could reject the request of the letter. It may give a reply or say that they are considering the request. The management could accept the request of the letter.

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Understanding the Representation Letter

Written by David T. Schwindt, CPA

What is a Representation Letter? As a Board member or manager of a community management company, you may be asked to sign a representation letter at the conclusion of an audit or a reviewed financial statement engagement.  Although the letter is from the Association/management company to the CPA, the CPA will generally draft the letter on behalf of the Association.   The letter includes certain assertions about the Association during the period covered by the financial statements.  Those assertions include but are not limited to the following:

• The Association/management company has provided the CPA with all requested financial information.
• The Association/management company has disclosed all related party transactions.
• The Association/management company has disclosed all existing and potential litigation.
• The Association/management company has disclosed any knowledge of fraud or financial irregularities.
• The Association takes responsibility for the design and implementation of a system of internal controls.  These controls include but are not limited to safeguarding assets, approving transactions and minimizing the risk of someone perpetrating a theft of money or information and not being discovered in a reasonable amount of time. Although the Board is ultimately responsible for this activity, it is common that Boards rely upon the management company to assist in this responsibility.

In some instances, the management company may sign a different representation letter because the responsibilities are slightly different.

Why is the Representation Letter necessary? The American Institute of Certified Public Accounts has determined that those charged with governance (the board of directors and the community management company) should take responsibility for the assertions in the representation letter.  CPAs are mandated to obtain the signed representation letter before issuing the final financial statements.

Who should sign the representation letter? Most often, the Board Chair, Board Treasurer and community manager signs the letter.

When does the Representation Letter need to be signed? The letter needs to be signed at the end of the engagement generally after a draft of the financial statements are issued.  Schwindt & Co combines the representation letter with the management letter comments and proposed adjusting journal entries for ease of review.  When the signed document is received by our office, we are then able to issue the final financial statements.

Should a new Board member or community manager who was not involved with Association management or governance during the period under audit or review be hesitant about signing the representation letter? This is a common question and the answer is simple.  No!  The first paragraph of the representation states that whoever signs the letter does so based on the best knowledge and belief of the person signing.  This means that even though you may be new to the Board or management company, it is perfectly fine to sign the letter because you will only be asserting to issues that you have knowledge.  It is very common for Board members/managers to sign a representation letter even though they were not involved during the period being audited or reviewed.

• Representation letters are normal and required before the issuance of audited/reviewed financial statements.
• Board members are only asserting to issues that they are aware of and new board members and managers frequently are required to sign representation letters.
• The Board Chair, Board Treasurer and community manager are generally required to sign the representation letter.

Questions regarding this article may be directed to David T. Schwindt, CPA at Schwindt & Co. (503) 227-1165.

12300 SE Mallard Way, Suite 275 Milwaukie, OR 97222 (503) 227-1165

OFFICE HOURS

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Copyright 2017-2024 Schwindt & Co. | All Rights Reserved

14+ Management Representation Letter Format, What is It, Examples

• Letter Format
• January 24, 2024
• Business Letters , Contract Letters , Legal Letters

Management Representation Letter Format : A management representation letter format is a formal document used by auditors to obtain written confirmation from management about certain financial and non-financial matters . The Business letter is an important part of the audit process as it helps auditors gain a better understanding of the client’s business operations, accounting policies, and financial reporting practices .

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Management Representation Letter Format

Content in this article

The management representation letter format is typically including the following components:

• Opening Paragraph: The Legal letter begins with a formal greeting and an explanation of the purpose of the letter. It may also include the date of the audit and the reporting period.
• Responsibilities of Management: This section outlines the responsibilities of management in relation to the financial statements and the audit process. It confirms that management is responsible for the preparation and presentation of the financial statements in accordance with accounting principles, maintaining adequate internal controls, and providing the auditor with access to all relevant information.
• Representations: This is the main body of the letter, where management makes specific representations about various financial and non-financial matters. These may include statements about the completeness and accuracy of financial statements, compliance with laws and regulations, the absence of fraud, and the adequacy of internal controls.
• Closing Paragraph: The Contract letter concludes with a statement confirming that management has disclosed all relevant information to the auditor and that the representations made in the letter are true and accurate.

It is important to note that the management representation letter Format is a legal document and should be drafted with care. Management should review the letter carefully before signing it, as they are legally responsible for the accuracy of the information provided.

In addition to providing auditors with important information about the client’s business, the management representation letter can also serve as a valuable communication tool between management and the auditor . It can help to identify potential issues early in the audit process and facilitate a smoother and more efficient audit.

Management Representation Letter Format – Sample Format

Below is a Sample Format of Management Representation Letter Format:

[Your Company Letterhead]

[External Auditor’s Name]

[External Auditor’s Firm]

[Address Line 1]

[Address Line 2]

[City, State, ZIP Code]

Dear [External Auditor’s Name],

Re: Management Representation Letter

We appreciate the opportunity to work with your firm in connection with the audit of the financial statements of [Your Company Name] for the fiscal year ended [Date]. In connection with your audit, we are providing you with this representation letter.

We, the management of [Your Company Name], confirm the following representations:

• The financial statements have been prepared in conformity with the generally accepted accounting principles (GAAP) and present fairly the financial position, results of operations, and cash flows of the company.
• Management is responsible for establishing and maintaining effective internal control over financial reporting, and there have been no significant changes in the internal control over financial reporting that could have a material effect on the company’s ability to record, process, summarize, and report financial data.
• To the best of our knowledge, there has been no fraud or illegal acts that have materially affected or are reasonably likely to materially affect the financial statements.
• Except as disclosed in the financial statements or in the notes thereto, there are no pending or threatened legal actions, claims, or assessments that could have a material effect on the financial statements.
• All significant information and documentation related to the company’s operations and financial transactions have been made available to your firm.
• We have disclosed all significant events occurring after the balance sheet date that would require adjustment to, or disclosure in, the financial statements.

This representation letter is provided to you in connection with your audit of the financial statements of [Your Company Name] and should be read in conjunction with the auditor’s report. We acknowledge our responsibility for the design and implementation of internal controls to prevent and detect fraud, as well as the preparation of financial statements.

Please let us know if you need any further information or clarification. We appreciate your professional services and look forward to a successful audit.

[Your Name]

[Your Title]

[Your Company Name]

[Your Contact Information]

This is a general template for a management representation letter. Specific content may vary based on the company’s circumstances and the requirements of the external auditor. It is advisable to consult with legal and accounting professionals when preparing such letters.

Email Ideas about Management Representation Letter Format

Here’s an Email Ideas for Management Representation Letter Format:

Subject: Request for Management Representation Letter

Dear [Manager’s Name],

I am writing to request your assistance in providing a management representation letter format to complete our audit process. As you are aware, the management representation letter is a crucial document that provides written confirmation from management on the accuracy and completeness of financial statements and related disclosures.

The representation letter helps our auditors to obtain evidence in support of the financial statements and to obtain assurance that management has fulfilled its responsibilities. It also serves as a tool for our auditors to document the representations made by management during the course of the audit.

We would appreciate it if you could provide the management representation letter as soon as possible, but no later than [date]. We understand that the process of preparing this letter can take some time and we are available to discuss any questions or concerns you may have.

Please let us know if you need any further information or assistance in preparing the letter. We appreciate your cooperation and look forward to completing the audit process.

Thank you for your attention to this matter.

Management Representation Letter Format to Auditor

This letter, presented to auditors, formalizes the company’s commitments, affirming the accuracy of financial data, adherence to accounting standards, and cooperation with auditors to ensure a transparent and accurate audit process.

We appreciate the opportunity to collaborate with your firm for the audit of the financial statements of [Your Company Name] for the fiscal year ended [Date]. In connection with the audit, we are pleased to provide you with the following representations:

• The management of [Your Company Name] is responsible for the preparation and fair presentation of the financial statements in conformity with the generally accepted accounting principles (GAAP).

Should you require any further information or clarification, please do not hesitate to contact us. We appreciate your professional services and look forward to a successful audit.

This letter is a general format for a management representation letter to an auditor. Specific content may vary based on the company’s circumstances and the requirements of the external auditor. Always consult with legal and accounting professionals when preparing such letters.

Management Representation Letter Format to Bank

This Management Representation Letter Format serves to affirm the accuracy of financial information, adherence to credit terms, and compliance with agreements, fostering transparency in the company’s dealings with the bank.

[Bank Name]

[Bank Address Line 1]

[Bank Address Line 2]

Dear [Bank Manager’s Name],

Re: Management Representation Letter for Banking Purposes

We hereby provide this Management Representation Letter in connection with our banking relationship with [Bank Name]. This letter is to confirm certain representations to assist the bank in its assessment of our financial standing and creditworthiness.

• We confirm that the financial statements provided to the bank are prepared in accordance with generally accepted accounting principles (GAAP) and present fairly our financial position as of [Date].
• All information provided regarding our credit facilities, loans, and guarantees is accurate, complete, and reflective of our current financial obligations to the best of our knowledge.
• We confirm that we are in compliance with all terms and conditions outlined in our loan agreements, credit facilities, and any other financial arrangements with the bank.
• We have disclosed any material changes in our financial condition, business operations, or other relevant matters that may impact our ability to meet our financial obligations to the bank.
• There are no pending or threatened legal proceedings, disputes, or litigation that could materially affect our ability to fulfill our financial commitments to the bank.
• The undersigned individuals have the authority to provide these representations on behalf of the company, and all necessary corporate approvals have been obtained.

This Management Representation Letter is provided solely for the purpose of supporting our banking relationship with [Bank Name]. We acknowledge our responsibility to promptly inform the bank of any material changes that may affect the accuracy of these representations.

If you require any additional information or documentation, please do not hesitate to contact us. We appreciate your continued support and understanding.

This Management Representation Letter to the bank is a formal document confirming key financial and operational details. Customize it as needed based on your specific banking relationship and requirements.

Management Representation Letter Format – Template

Here’s a Template of Management Representation Letter Format:

[Company Letterhead]

[External Auditor Name] [External Auditor Address] [External Auditor City, State ZIP Code]

Dear [External Auditor Name],

We are pleased to provide you with this management representation letter in connection with the audit of our financial statements for the year ended [Date]. As management of [Company Name], we acknowledge our responsibility for the preparation and presentation of the financial statements in accordance with generally accepted accounting principles.

We confirm that we have provided you with all relevant information necessary for the audit and that we have disclosed all known or suspected fraud, illegal acts, or non-compliance with laws and regulations that may have a material effect on the financial statements.

We represent that the financial statements are complete and accurate, and that they fairly present, in all material respects, the financial position of [Company Name] as of [Date], and the results of its operations and cash flows for the year then ended.

We also confirm that the representations made in this letter are true and accurate as of the date of this letter.

[Your Name] [Your Title] [Your Company Name]

Management Representation Letter for External Audit

This letter reinforces the company’s commitment to transparency, providing essential assurances to external auditors regarding the accuracy of financial information and cooperation throughout the audit, crucial for ensuring the integrity of the audit process.

[Audit Firm Name]

[Audit Firm Address]

Re: Management Representation for the External Audit of [Company Name]

We, the undersigned management of [Your Company Name], hereby provide this letter to confirm certain representations in connection with the external audit of our financial statements for the fiscal year ending [Date].

• We confirm that the financial statements, including the balance sheet, income statement, and cash flow statement, present a true and fair view of the financial position of [Your Company Name] as of [Date].
• The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) [or International Financial Reporting Standards (IFRS)].
• We have established and maintained effective internal controls to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with applicable accounting standards.
• All significant information and disclosures related to our operations, financial position, and business transactions that may affect the understanding and interpretation of the financial statements have been disclosed to the best of our knowledge.
• All assets and liabilities, including contingent liabilities, have been properly recorded and disclosed in the financial statements.
• We have disclosed to you all known and potential legal claims, disputes, and litigations that may have a material impact on the financial statements.
• We acknowledge our responsibility to provide you and your team with complete access to all information and documents requested during the audit process.
• We confirm that there have been no changes in accounting policies or practices that materially affect the financial statements without appropriate disclosure.

This letter is provided solely for the purpose of supporting the external audit of our financial statements. We understand the importance of your audit in providing assurance to our stakeholders, and we commit to providing all necessary cooperation throughout the audit process.

If you require any additional information or clarification, please do not hesitate to contact us.

This Management Representation Letter for an external audit assures the auditor of the accuracy and completeness of financial statements, compliance with accounting standards, and cooperation during the audit process. Customize it as per your specific company and audit requirements.

Management Representation Letter to Investors

This letter serves as a transparent communication tool, instilling confidence among investors by affirming the company’s commitment to sound financial practices, compliance, and overall business stability.

[Investor’s Name]

[Investor’s Company/Organization]

[Investor’s Address]

Dear [Investor’s Name],

Re: Management Representation Letter to Investors

We, the undersigned management of [Your Company Name], are pleased to provide this letter to investors to affirm certain key aspects of our operations and financial position. This representation is made as of [Date] in connection with your investment in our company.

• We confirm that the financial statements provided to investors accurately represent the financial position of [Your Company Name] as of [Date]. The statements have been prepared in accordance with generally accepted accounting principles (GAAP) [or International Financial Reporting Standards (IFRS)].
• The management assures investors that the operational performance of the company is in line with the disclosed business plans and strategies. Any material changes have been duly communicated.
• We confirm that the company is in compliance with all applicable laws and regulations relevant to its operations. Any deviations have been appropriately addressed or disclosed.
• All material contracts and agreements that may impact the company’s financial position have been accurately disclosed to investors. There have been no material breaches of these contracts.
• The management has disclosed all known risk factors that may materially affect the company’s financial position or future prospects. We are committed to proactive risk management.
• Funds invested by our esteemed investors have been utilized in accordance with the stated purposes and business plans as communicated during the investment process.
• Any forward-looking statements made by the management are based on reasonable assumptions. However, actual results may vary, and the company is not obligated to update these statements.
• The management is dedicated to maintaining open lines of communication with investors. Any significant developments or changes in the company’s status will be promptly communicated.

This letter is intended to provide additional assurance and transparency to our valued investors. We appreciate your trust in [Your Company Name] and remain committed to creating value and fostering a mutually beneficial partnership.

If you have any questions or require further clarification, please do not hesitate to contact us.

This Management Representation Letter to Investors affirms key aspects of the company’s financial position, operational performance, and commitment to transparency, providing reassurance to investors about their investment in the company. Customize it as per your specific company and investor relations.

Management Representation Letter to Regulators

This letter serves as a formal commitment from the company’s management to regulatory bodies, ensuring transparency, accountability, and adherence to regulatory requirements, thereby fostering trust and regulatory compliance.

[Regulatory Authority Name]

Subject: Management Representation Letter

Dear [Regulatory Authority Name],

Re: Management Representation for Compliance with [Applicable Laws/Regulations]

We, the undersigned management of [Your Company Name], hereby provide this letter to confirm our commitment to compliance with all applicable laws, regulations, and industry standards under the jurisdiction of [Regulatory Authority Name].

• We affirm that our company operates in full compliance with all relevant laws and regulations governing our industry and business operations.
• The financial statements of [Your Company Name], including the balance sheet, income statement, and cash flow statement, have been prepared in accordance with applicable accounting standards, providing a true and fair view of the company’s financial position.
• We have established and maintained effective internal controls to ensure the accuracy and reliability of financial reporting and compliance with regulatory requirements.
• All material information, events, and transactions that may affect the company’s compliance status or financial position have been transparently disclosed.
• We commit to timely and accurate filing of all required reports, statements, and documentation as per the regulations enforced by [Regulatory Authority Name].
• We acknowledge our responsibility to fully cooperate with any regulatory inspections or inquiries that may arise, providing all necessary information and documentation as requested.
• Our management is dedicated to continuous improvement in our compliance practices, ensuring that we stay abreast of any changes in laws or regulations that may impact our business.

This letter is provided for the purpose of assuring [Regulatory Authority Name] of our dedication to compliance and transparent business practices. We understand the importance of regulatory oversight in maintaining market integrity and protecting the interests of stakeholders.

This Management Representation Letter to Regulators emphasizes the company’s commitment to compliance with applicable laws and regulations, providing assurance to regulatory authorities and fostering transparency in business operations. Customize it based on your specific company and regulatory requirements.

Management Representation Letter Format – Example

Here’s an Example of Management Representation Letter Format:

As management of [Company Name], we acknowledge our responsibility for the preparation and presentation of the financial statements in accordance with generally accepted accounting principles. We understand that you will be conducting an audit of our financial statements for the year ended [Date].

We confirm that we have disclosed all known or suspected fraud, illegal acts, or non-compliance with laws and regulations that may have a material effect on the financial statements. We also confirm that we have provided you with access to all relevant information necessary for the audit.

We understand that this letter is a legal document and that we are responsible for the accuracy of the information provided. We confirm that the representations made in this letter are true and accurate as of the date of this letter.

Management Representation Letter Format – Example 

Formal Management Representation Letter Format

This Management Representation Letter Format serves to provide external auditors with essential assurances from management regarding the accuracy and completeness of financial information, adherence to legal and regulatory requirements, and the effectiveness of internal controls.

Re: Management Representation for [Year/Period] Ended [End Date]

We, the undersigned management of [Your Company Name], are providing this letter to confirm certain representations made to you during the audit of our financial statements for the [Year/Period] ended [End Date].

• We acknowledge our responsibility for the preparation and fair presentation of the financial statements in accordance with the applicable financial reporting framework.
• To the best of our knowledge and belief, the company has complied with all relevant laws and regulations that may materially affect the financial statements.
• We have established and maintained effective internal control over financial reporting, and any identified deficiencies have been disclosed to you.
• We have made you aware of any known or suspected instances of fraud or illegal acts affecting the company.
• All related party transactions have been accurately identified, disclosed, and recorded in accordance with the applicable financial reporting framework.
• We have disclosed to you all known actual or potential litigation and claims that may have a material effect on the financial statements.
• We have assessed the company’s ability to continue as a going concern and disclosed any uncertainties related to going concern appropriately.
• The information provided to you during the audit is complete and accurate, and we have disclosed all significant matters relevant to the financial statements.

This representation is provided to assist you in obtaining reasonable assurance that the financial statements are free from material misstatement. If there are any additional matters or information you require, please contact us promptly.

We appreciate your professional services and look forward to a successful completion of the audit.

This Formal Management Representation Letter Format is designed to provide external auditors with assurances on various aspects related to financial statements, compliance, internal controls, and more. Customize it based on your specific company and audit requirements.

Fraud and Illegal Acts Representation Letter

This letter underscores the company’s dedication to integrity and transparency, outlining measures taken to prevent and address fraudulent activities, and providing assurances to external auditors regarding compliance with legal and ethical standards.

Subject: Representation Regarding Fraud and Illegal Acts

Re: Fraud and Illegal Acts Representation

We, the undersigned management of [Your Company Name], hereby provide this representation regarding the prevention, detection, and reporting of fraud and illegal acts within the organization for the [Year/Period] ended [End Date].

• We acknowledge our responsibility for the prevention and detection of fraud and illegal acts within the organization.
• We have established and maintained internal controls and procedures designed to prevent and detect fraud and illegal acts.
• Employees are provided with adequate training and awareness programs to understand the risks associated with fraud and illegal acts and are encouraged to report any concerns through appropriate channels.
• We have communicated ethical standards and expectations to all employees, emphasizing our commitment to conducting business with integrity and in compliance with applicable laws and regulations.
• Any known or suspected instances of fraud or illegal acts are promptly reported to the appropriate levels of management and, if necessary, to the board of directors.
• In the event of identified fraud or illegal acts, we conduct thorough investigations and implement remedial actions, including disciplinary measures and corrective measures to prevent recurrence.
• We have established mechanisms to protect whistleblowers from retaliation and encourage the reporting of concerns without fear of reprisal.
• We commit to cooperating fully with external authorities, including law enforcement agencies and regulatory bodies, in the investigation of fraud or illegal acts.
• All representations made to you regarding the prevention, detection, and reporting of fraud and illegal acts are accurate and complete.

This representation is provided to assist you in obtaining reasonable assurance that the financial statements are free from material misstatement, including those resulting from fraud or illegal acts.

If you have any questions or require further clarification on any matters related to fraud and illegal acts, please do not hesitate to contact us.

This Fraud and Illegal Acts Representation Letter is designed to assure external auditors of the company’s commitment to preventing, detecting, and reporting fraud and illegal acts. Customize it based on your specific company policies and procedures.

FAQS About Management Representation Letter Format, What is It, Examples

What is a management representation letter format.

A Management Representation Letter Format is a formal document issued by a company’s management to external auditors, confirming certain representations related to financial statements, compliance, internal controls, and other crucial aspects during an audit.

What is the Purpose of a Management Representation Letter Format?

The primary purpose is to provide external auditors with written representations from management regarding various aspects of the company’s operations. Management Representation Letter Format helps auditors obtain assurance on the accuracy and completeness of financial information and other relevant matters.

What Information is Typically Included in a Management Representation Letter Format?

The Management Representation Letter Format typically includes representations related to financial statements, compliance with laws and regulations, internal controls, fraud and illegal acts, related party transactions, litigation, and the going concern assumption.

Why is a Management Representation Letter Format is Important in an Audit?

The Management Representation Letter Format is crucial as it formalizes management’s acknowledgment of its responsibilities and provides auditors with assurances on key matters. It enhances the audit process by obtaining explicit confirmations from management regarding the information and processes being audited.

Is a Management Representation Letter Standardized?

While there are common elements, the letter is often customized to suit the specific circumstances and requirements of the company and the audit. It may vary in content based on industry practices, regulatory requirements, and the auditor’s specific requests.

Are There Risks Associated with Providing Management Representation Letter Format?

Yes, Management Representation Letter Format, there are risks, and management should carefully consider the accuracy of the representations made. Providing false or misleading information in the representation letter can have legal and financial consequences.

The Management Representation Letter Format is a formal document that serves as an important part of the audit process . It outlines the responsibilities of management and makes specific representations about various financial and non-financial matters. The Management Representation Letter Format should be carefully reviewed and signed by management to ensure that the information provided is accurate and complete .

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Home » Blog » Illustrative Management Representation Letter (MRL) for Tax Audit

Illustrative Management Representation Letter (MRL) for Tax Audit

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• Last Updated on 20 September, 2023

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_____________________

Chartered Accountants

Address: ____________

(Date: ______________)

Sub: Representation from Management for the purpose of Tax Audit under section 44AB of the Income Tax Act, 1961 (The “Act”) for the year ended on 31st March, 20XX.

Respected Sir/ Madam,

This representation letter is provided in connection with the tax audit u/s 44AB of the Income Tax Act of _______________ for the year ended 31st March, 20XX for the purpose of expressing an opinion as to whether the Form 3CD along with the annexure thereto gives a true and correct view of the facts mentioned therein. We acknowledge our responsibility to keep and maintain such books of account and other documents as may enable tax auditor to complete tax audit u/s 44AB, in accordance with the provisions of the Income Tax Act, 1961

We confirm the following representations to the best of our knowledge and belief:

1. The name of the assessee as per PAN card is __________. A copy of PAN Card has been attached herewith.

2. The assessee has no other business address than communicated to the Income-tax Department for assessment purposes.

3. The Assessee has employed the cash/mercantile system of accounting during the year.

4. There has been a change in the method of accounting employed in the previous year as compared to that employed in the immediately preceding financial year i.e. F.Y. 20XX-XX. The effect of the same on profit is as follows:

The assessee is liable/not liable to pay indirect taxes & if yes, for that registration number is as follows:

(a) Service Tax: _________________

(b) VAT: _________________

(c) Excise: _________________

(d) Import Export Code: _________________

(e) GST: _________________

Copy of the Registration Certificates (RCs) has been attached herewith.

5. The Assessee has not opted to be assessed under any of the 115BA/115BAA/115BAB/115BAC/115BAD.

6. We confirm that the profit and loss account does not include any profits and gains assessable on a presumptive basis under relevant sections 44AD, 44AE, 44AF, 44B, 44BB, 44BBA, 44BBB or any other relevant section

7. The Assessee is engaged in the business as reported in clause 10(a) of Form 3CD.

8. The Assessee has disclosed the nature of every business carried on by it and there is no change in the nature of business carried in the previous year from the earlier years.

9. The Assessee has maintained books of accounts in the “ERP” based computer system in accordance with the generally accepted accounting principle and the following books are generated by the computer systems:-

(a) Cash Book

(b) Bank Book

(d) Journal

10. The above books and accounts have been maintained and kept as per the addresses mentioned in clause 11(b) of Form 3CD.

11. The following are the members/partners of the firm & their profit-sharing ratio is as follow:

12. There are no items of the following nature which are not credited to the profit and loss account where applicable:

(a) items falling under the scope of Section 28 of the Act;

(b) the performa credits, drawbacks, refund of duty or customs or excise or service-tax or refund due by the authorities concerned;

(c) escalation claims accepted during the previous year;

(d) any other item of income; and

(e) capital receipts.

13. During the Previous Year, the assessee has not transferred any land or building for a consideration less than the value adopted or assessed or assessable by any authority of a State Government referred to in section 43CA or 50C.

14. The Assessee has disclosed ICDS as required by the disclosure norms mentioned as per section 145(2) of the Income Tax Act, along with any adjustment in clause 13(e) of Form 3CD.

15. Adjustments is required to be made to the profits or loss to comply with the provisions of ICDS. The effects of such adjustments are as follow:

16. The Closing stock in respect of Raw Material, Work In Progress, and Finished Goods are valued at cost or Net Realizable Value (NRV) whichever is less. The assessee has changed/not changed its accounting policy regarding the valuation of inventories during the previous year. The change of accounting policy has resulted in an increase/decrease in profit by Rs. ____________ in the previous year 20XX-XX.

17. The particulars disclosed in respect of depreciation allowable as per the Income Tax Act, 1961 in respect of each asset or block of assets, as the case may be as required under clause 18 of Form No. 3CD are correct.

18. There are no amounts admissible under sections 32AC, 32AD, 33AB, 33ABA, 33AC (wherever applicable), 35(1), 35(2AB), 35ABB, 35AC, 35CCA, 35CCB, 35CCC, 35CCD, 35D, 35DD and 35E which are debited/not debited to the profit and loss account.

19. The Assessee has not paid any sum to an employee as bonus or commission for services rendered, where such sum was otherwise payable to him as profits or dividend.

20. The sums received from employees towards contributions to any provident fund or superannuation fund or any other fund mentioned u/s 2(24) (x) and the due date of payments and the actual date of payments to the concerned authorities u/s 36(1) (va) as disclosed against clause 20(b) of form 3CD are correct.

21. The assessee has not debited any expense being in the nature of Capital Expenditure to Profit and Loss Account.

22. We certify that there are no capital assets which are converted into stock in trade

23. The assessee has not debited any expense being in the nature of Personal Expenditure to Profit and Loss Account.

24. The Assessee had not released any advertisement in any souvenir, brochure, tract, pamphlet or the like, published by any political party.

25. The Assessee had not made any payments to club as entrance fees, subscriptions and for club services and facilities used.

26. The Assessee had not incurred any expenditure by way of penalty or fine for violation of any law and no expenditure was incurred for any purpose which is an offence or which is prohibited by law except a sum of Rs. ________ as interest on late deposit of TDS under section 201(1A) and Interest on Income Tax under section 206C(7) which is duly reported in clause 34(c) of Form 3CD.

27. The Assessee had not incurred any expenditure by way of any other penalty or fine.

28. There are no amounts inadmissible u/s 40(a) of the Act except Rs. __________ being the amount paid to a resident on which tax is not deducted. Refer clause 21(b)(ii)(A) of Form 3CD.

29. As certified, in relation to any expenditure covered u/s 40A (3), all payments were made by an account payee Cheque drawn on a bank or account payee bank draft. That all payments exceeding Rs. 10,000 have been made either by an account payee Cheque drawn on a bank or account payee bank draft or by electronic clearing system.

30. The Assessee has paid no sums, which are disallowed u/s 40A (9).

31. The Assessee has not debited any item of a contingent nature to the profit and loss account.

32. The deduction u/s 14A amounting to Rs. ___________ in respect of expenditure incurred in relation to income which does not form part of the total income is correct.

33. The Assessee does not have any amount of interest paid that is inadmissible under the provision to section 36 (1) (iii) of the Act.

34. Particulars of payments made to persons specified under section 40A(2)(b) as mentioned in clause 23 of Form 3CD are correct.

35. There is no amount of profit chargeable to tax u/s 41 of the Act.

36. That during the previous year the assessee has not received any property, being share of a company not being a company in which the public are substantially interested, without consideration or for inadequate consideration as referred to in section 56(2)(viia) except reported under clause 28 of Form 3CD.

37. There are no other income during the previous year that the assessee received by way of consideration for issue of shares which exceeds the fair market value of the shares as referred to in section 56(2)(viib)/(ix)/(x) except for clause 29 of Form 3CD.

38. There are no sums referred to under clauses (a), (b), (c), (d), or (e) of section 43B, the liability for which pre-existed on the first day of the previous year but was not allowed in the assessment of any preceding previous year except those disclosed against clause 26(A) of form 3CD. The amount of expenditure incurred during the previous year, paid on or before filing of return u/s 139(1) is duly reported in clause 26(B)(a) and not paid on or before the aforesaid date under clause 26(B)(b) of Form 3 CD.

39. The amount of Central Value Added Tax Credits/Input Tax Credit (ITC) availed of or utilised during the previous year and its treatment in profit and loss account and treatment of outstanding Central Value Added Tax Credits/Input Tax Credit(ITC) in accounts as per relevant law is duly reported in Form 3CD vide clause No. 27 (a).

40. There is no income or expenditure or prior period credited to the profit and loss account except those shown against clause 27 (b) of 3CD.

41. As certified, it is the practice of the Assessee to accept any loan or deposit or any sum and to make any repayment of loan or deposit or any sum in excess of Rs. 20,000 by account payee cheque or account payee bank draft or by electronic clearing system only.

42. There are no amounts/deductions admissible under Chapter VI-A or Chapter III (section 10A, section 10AA) under Clause 33 of Form No. 3CD except disclosed in Form 3CD.

43. That the assessee has complied with all the provisions of Chapter XVII-B or Chapter XVII-BB of the Act and deduction or collection of tax at source has been made at the applicable rates under the relevant provisions of the Act. There have been no cases of tax-deductible where tax has not been deducted at all, or shortfalls on account of lesser deduction than required to be deducted or tax deducted or tax deducted late or tax deducted but not paid to the credit of the Central Government in accordance with the provisions of Chapter XVII-B or Chapter XVII-BB of the Act, except as disclosed in clause 34(a) of Form 3CD.

44. The Assessee has furnished the statement of tax deducted and collected within the prescribed time except as disclosed in clause 34(b) of Form 3CD.

45. The interest under section 201(1A) or section 206C (7) disclosed under clause 34(c) of Form 3CD is correct.

46. There are no other quantitative details of any other item that an entity principally traded or manufactured other than disclosed under clause 35.

47. That assessee has not received any amount in the nature of dividend as referred to in sub-clause (e) of clause (22) of section 2 except as disclosed under clause 36A of Form 3CD.

48. During the previous year there was no audit conducted under the Central Excise Act 1944 and under section 72A of the Finance Act, 1994.

49. There was no adverse comment raised and reported by the cost auditor of the assessee during the previous year.

50. There is no demand raised or refund issued during the previous year under any tax laws other than the Income Tax Act,1961 and Wealth Tax Act, 1957 except as disclosed in clause 41 of Form 3CD.

51. The detail regarding turnover, gross profit etc. for the previous year and preceding previous year are correctly calculated and disclosed in clause 40 of Form 3CD.

52. The Assessee has complied the requirement of furnishing the statements in Form 61 or Form No. 61A or Form No. 61B

53. The Assessee has complied the requirement to furnish statement as prescribed under sub-section (2) of section 286.

54. There is no other expenditure of entities registered or not registered under the GST as disclosed in clause 44 of Form 3CD.

For and on behalf of

(Director Finance)

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Download Format of Management Representation Letter for Company Audit

Management representation is a letter issued by a client to the auditor in writing as part of audit evidences. It serves to document management’s representations during the audit, reducing misunderstandings of management’s responsibilities for the financial statements.

Below is the format of Managmenet representation letter:

On the letter head of the company

Name and address of auditors

Sub:   Representation for the purpose of audit for the financial year 2019-20 (Assessment year 2020-21 )

This representation letter is provided in connection with your audit of the financial statements of «Name of the company» for the year ended 31.03.2020 for the purpose of expressing an opinion as to whether the financial statements give a true and fair view of the financial position of «Name of the company» , as on 31.03 .2020 and of the results of operations for the year then ended. We acknowledge our responsibility for preparation of financial statements in accordance with the requirements of the Companies Act, 2013 and recognized accounting policies and practices, including the Accounting Standards issued by the Institute of Chartered Accountants of India.

We confirm, to the best of our knowledge and belief, the following representations;

Accounting Policies

• The accounting policies which are material or critical in determining the results of operations for the year or financial position is set out in the financial statements are consistent with those adopted in the financial statements for the previous year. The financial statements are prepared on accrual basis except discounts claims and rebates, which cannot be determined with certainty in the respective accounting year.
• Significant assumptions used by us in making accounting estimates, including those measured at fair value, are reasonable.
• All events subsequent to the date of the financial statements and for which applicable accounting standards in India require adjustment or disclosure have been adjusted or disclosed.
• The effects of uncorrected misstatements are immaterial, both individually and in the aggregate, to the financial statements as a whole.
• We have fulfilled our responsibilities, as set out in the terms of the audit engagement, for the preparation of the financial statements in accordance with Financial Reporting Standards; in particular, the financial statements give a true and fair view in accordance with the applicable accounting standards in India.

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6. The company has satisfactory title to all assets.

The company has satisfactory title to all assets and is subject to first charge to _______________ for securing the working capital loan/ Term loan.

Fixed Assets

7. The net book values at which fixed assets are stated in the balance sheet are arrived at;

• After taking into account all capital expenditure on additions thereto, but no expenditure being chargeable to revenue.
• After eliminating the cost and accumulated depreciation relating to items sold, discarded, demolished or destroyed.
• After providing adequate depreciation on fixed assets during the period.

Capital Commitments

8. At the balance sheet date, there were no outstanding commitments for capital expenditure.

Investments

9. The company does not have any investments.

10. All the investments shown in the balance sheet are “Long Term Investment’.

11. Long-term quoted investments are valued cost less provision for permanent diminution in their value.

12. Long term unquoted investments are valued at cost.

13. All the investments belong to the entity and they do not include any investments held on behalf of any other persons.

14. The entity has clear title to all of its investments. There are no charges against the investments of the entity except those appearing in the records of the entity.

Inventories

15. Inventories at the year-end consisted of the following:

16. All quantities were determined by actual physical count or weight that was taken under our supervision and in accordance with written instructions, on 31.3.2020.

17. All goods included in the inventory are the property of the entity, and none of the goods are held as consignee for others or as bailee.

18. All inventories owned by the entity, wherever located, have been recorded.

19. Inventories do not include goods sold to customers for which delivery is yet to be made.

20. Inventories have been valued at cost or net-realizable value, whichever is less.

21. In our opinion, there is no excess, slow moving, damaged or obsolete inventories, hence no provision is required to be made.

22. No item of inventories has a net realizable value in the ordinary course of business, which is less than the amount at which it is included in inventories.

Debtors, Loans and Advances

23. The following items appearing in the books as at 31.3.«YearClos» are considered good and fully recoverable.

Liabilities

24. We have recorded all known liabilities in the financial statements except retirement benefits, discounts claims and rebates.

25. We have disclosed in Notes on Accounts all guarantees that, if any we have given to third parties.

26. There are no Contingent Liabilities as on 31.3.2020.

Provisions for Claims and Losses

27. There are no known losses and claims of material amounts for which provision is required to be made.

28. There have been no events subsequent to the balance sheet date which require adjustment of or disclosure in, the financial statements or notes thereto.

Statement of Profit and Loss

29. Except as disclosed in the financial statements, the results for the year were not materially affected by;

• Transactions of a nature not usually undertaken by the company.
• Circumstances of an exceptional or non-recurring nature.
• Charges or credits relating to prior years
• Changes in accounting policies

30. The following have been properly recorded and, when appropriate, adequately disclosed in the financial statements;

• Loss arising from sale and purchase commitments.
• Agreements and options to buy back assets previously sold.
• Assets pledged as collateral.

31. All transactions have been recorded in the accounting records and are reflected in the financial statements.

32. There have been no irregularities involving management or employees who have a significant role in the system of internal control that could have a material effect on the financial statements.

33. The financial statements are free of material misstatements, including omissions.

34. The Company has complied with all aspects of contractual agreements that could have a material effect on the financial statements in the event of non-compliance. There has been no non-compliance with requirements of regulatory authorities that could have a material effect on the financial statements in the event of non-compliance.

35. We have no plans or intentions that may materially affect the carrying value or classification of assets and liabilities reflected in the financial statements.

36. The allocation between capital and revenue has been correctly done and that no items of capital nature have been debited to Statement of Profit & Loss and vice versa.

37. The Cash balance as on 31.3.2020 has been physically verified by the management at Rs. ________.

38. The details of disputed dues in case of GST/VAT/sales tax/ income tax/ customer tax/ excise duty/ cess/PF/ESI which have not been deposited on account of dispute is as under:

39. The company has not defaulted in repayment of dues to financial institution or bank.

40. The company has not given any guarantee for loans taken by others from bank or financial institutions.

41. No personal expenses have been charged to revenue accounts

42. We have provided you with:

• Access to all information of which we are aware that is relevant to the preparation of the financial statements such as records, documentation and other matters;
• Additional information that you have requested from us for the purpose of the audit; and
• Unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence.
• We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud.

43. We have disclosed to you all information in relation to fraud or suspected fraud that we are aware of and that affects the entity and involves:

• Management;
• Employees who have significant roles in internal control; or
• Others where the fraud could have a material effect on the financial statements.

45. Related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the requirements of applicable accounting standards in India. We have disclosed to you the identity of the entity’s related parties and all the related party relationships and transactions of which we are aware.

46. The payments covered under section 40A (3) were made by account payee cheques drawn on a bank or account payee bank draft.

47. All the loans, deposits or specified sum exceeding the limit specified in section 269SS/T are accepted or repaid through an account payee cheque or an account payee bank draft.

48. The information regarding applicability of MSMED Act 2006 to the various supplier/parties has not been received from the suppliers. Hence information as required vide clause 22 of chapter V of MSMED Act 2006 is not being given.

49. The loans taken from directors of the company or their relatives are out of their own funds and not any borrowed funds in pursuance of relevant provisions of Companies Act, 2013. Necessary declarations in this behalf have been obtained by the company from them.

By order of the Board

For «Name of the company»

«Director 1 name» Director «Director 2 name» Director

DIN : DIN :

Dated:- «Balancesheet Date»

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Draft Format of Engagement letter & Management representation on Tax Audit

Purpose: The main purpose of Management Representation Letter on various matters is to focus the management’s attention on those matters so that the management can specifically address those matters in more detail than would otherwise be the case.

However the Auditor needs to understand the limitations of management representations as audit evidence. Getting a Management Representation Letter does not absolve the auditor of its responsibilities. He has to exercise professional care in conducting the audit. However draft format of Draft Format of Engagement letter & Management representation on Tax Audit are as under:-

Draft Format of Engagement letter on Tax Audit

Date: XX/XX/2020

The Executive Director (Mention the name & Address of client)

We refer to the letter dated informing us about our (re) appointment as the tax auditors of the Company/Partnership/LLP/individual. You have requested our firm “ ……….” to do the tax audit of the Company/ Partnership/LLP/individual as defined in Section 44AB of the Income Tax Act, 1961, for the previous year(s) ending March 31, 2020. The tax audit of the Company/Partnership/LLP/individual include issuance of Tax Audit Report in Form Nos. 3CA/3CB and 3CD & filing the same with Income Tax Department. We are pleased to confirm our acceptance and our understanding of this audit engagement by means of this letter.

Our audit will be conducted for the purpose to ascertain/derive/report the requirements of Form Nos. 3CA/3CB and 3CD, to ensure that the books of account and other records are properly maintained, that they truly reflect the income of the taxpayer and claims for deduction/relief are correctly made by him & to checking fraudulent practices. In ascertaining/deriving/reporting the requirements of tax audit, we will rely on the work of statutory auditors appointed by the Company, to the extent it will required.

We will conduct the tax audit in accordance with the Provisions of Income Tax Act, 1961 & rules and regulations made thereunder. This tax audit involves performing procedures to ascertaining/deriving/reporting the requirements and the disclosures required in Form 3CA/CB & 3CD. Tax audit also includes evaluating the compliances with the provisions of Income Tax, TDS and with other laws.

Form 3CD should be duly filled & authenticated by the Management. We will only verify and confirm the same & on that basis form our opinion & issue the report in Form 3CA/3CB as the case may be.

• For the preparation of tax audit report that give assurance in accordance with the provision of the Act, This includes:
• Compliance with the applicable provisions of the Income Tax Act, TDS Provisions & GST Provisions;
• Proper maintenance of accounts and other matters connected therewith;
• Identifying and informing us of financial transactions or matters that may have any adverse effect on the tax compliance of the Company.
• Providing the required information completely and accurately in required formats.
• To provide us, inter alia, with:
• Access, at all times, to all information, including the books, accounts, vouchers and other records and documentation of the Company, whether kept at the Head Office or elsewhere, of which the Management is aware that are relevant to the “books of account” such as records, documentation and other matters.
• Access to reports, if any, relating to internal reporting on frauds (e.g., vigil mechanism reports etc.), including those submitted by cost accountant or company secretary in practice;
• Additional information that we may request from the Management for the purposes of our audit;
• Unrestricted access to persons within the Company from whom we deem it necessary to obtain audit evidence. This includes our entitlement to require from the officers of the Company such information and explanations as we may think necessary for the performance of our duties as the tax auditors of the Company; and
• All the required support to discharge our duties as the tax auditors.

As part of our audit process, we will request from the Management written confirmation concerning representations made to us in connection with our audit.

Our report prepared in accordance with relevant provisions of the Act would be addressed to the Company. The form and content of our report may need to be amended in the light of our audit findings.

Our fees will be billed as follows”

The total audit fee of Rs…… (Excluding GST) (Rupees………………only) which will be billed on submission of the audit report.

We wish to emphasis that our audit report will be exclusively for income-tax purposes. We shall not be liable for any way to any third party to whom you may make the audit report available.

We also wish to invite your attention to the fact that our audit process is subject to ‘peer review’ under the Chartered Accountants Act, 1949. The reviewer may examine our working papers during the course of the peer review.

Please sign and return the attached copy of this letter to indicate that it is in accordance with your understanding of the arrangement for our audit of the financial statements.

Thanking you Yours faithfully For M/s …... Chartered Accountants (Mention name & Designation of Partner)

Draft Format of Management Representation Letter –Tax Audit

[ON THE LETTER HEAD OF AUDITEE] Date: XX/XX/2020

M/s …... Chartered Accountants

Sub: Management Representation in course of Tax Audit for A.Y……

Please find enclosed a copy of Form 3 CD along with all relevant details for the purpose of conducting the Tax Audit of XYZ Company, for the year ended 31st March, 2020. In this connection, we further confirm that

• The address that we have reported in Clause 2 of the form 3CD is same as we have informed to the income tax department, there is no change in the same.
• That the registration or identification number, if any, under indirect tax laws including excise duty, goods & service tax, sales tax, customs duty, etc. as informed to you and reported in Clause 4 of Form 3CD are correct and there is no other number other than what is reported in said clause.
• We certify, there has been no change in the partners or members or in their profit sharing ratio since the last date of the preceding year during the year under report as stated in clause 9 (b) of form 3 CD.
• We certify, there has been no change in the nature of business during the year under report as stated in clause 10 (a) of form 3 CD.
• That the List of books of account as prescribed u/s 44AA have been maintained and the address at which the books of accounts are kept as reported in Clause 11 has been informed by us and there are no other books and no other location at which books are kept.
• We confirm that the profit and loss account does not include any profits and gains assessable on presumptive basis under relevant sections 44AD, 44AE, 44AF, 44B, 44BB, 44BBA, 44BBB or any other relevant section as stated in clause 12 of form 3 CD.
• The company has followed the mercantile system of accounting & there is no change in the method of accounting employed in the immediately preceding previous year, for the preparation of final accounts for the financial year 2019-2020 as stated in clause 13 of form 3 CD.
• We certify that the valuation of closing stock is on the same basis & there is no deviation from the method of valuation prescribed under section 145A as stated in clause 14 of form 3 CD.
• We certify that there are no capital assets which are converted into stock in trade as stated in clause 15 of form 3 CD.
• We certify there is no capital receipt which is credited to Profit & Loss Account as stated in clause 16 of form 3 CD.
• We certify that the items falling within the scope of section 28 have been correctly stated in clause 16.
• That there is no land or building or both which is transferred during the previous year for a consideration less than value adopted or assessed or assessable by any authority of a State Government referred to in section 43CA or 50C, other than what is informed by us and has been reported in Clause 17 of Form 3CD.
• We follow a policy of capitalizing an asset only after the asset has been purchased and has been put to use. The date on which the asset is put to use is as certified by us in Clause 18 of Form 3CD.
• We certify that particulars of depreciation allowable as per the Income-tax Act, 1961 in respect of each asset or block of assets, as the case may be are correct.
• We certify that there is no sum paid to an employee as bonus or commission for service rendered, where such sum was otherwise payable to him as profit or dividend as stated in clause 20 of form 3 CD.
• The employee’s and employer’s share contributed towards provident fund, pension fund and ESI, date of deposit and amount of deposit is correctly stated in clauses 20 (b) of Form 3CD.
• No Capital Expenses have been debited to any Revenue Accounts as stated in clause 21 (a) of form 3 CD.
• All the expenses incurred on during the Year by us are for the purpose of business only.
• No personal expenses, except those under contractual obligations or by generally accepted business practice, have been charged to the profit & loss account.
• We certify that there is no expenditure on advertisement in any souvenir, broucher, tact, pamphlet etc. published by a political party. Further we confirm that we have not made any expenditure at clubs.
• There have been no amounts in the nature of penalties or fines levied on us other than what has been disclosed in Clause 21 (a).
• We have not made any payments otherwise than Account payee cheque, above Rs. 10,000/- (Rs.35,000 in case of Transporters) covered u/s 40A(3) or Section 40A(3A) during the year except those which have been disclosed in Clause 21(d).
• No sums have been paid by the company as an employer which is not allowable U/s 40A (7) of the Income Tax Act, 1961 as stated in Clause 21(e).
• We have not incurred any liability of a contingent nature as stated in Clause 21(g).
• No amount of interest inadmissible under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006 other than stated in Clause 22.
• All transactions with any related party within the meaning of section 40(A)(2)(b) of the Act, have been disclosed in Clause 23.
• No amounts deemed to be profits and gains under section 32AC or 32AD or 33AB or 33ABA or 33AC other than stated in Clause 24.
• There is no amount of profit chargeable to tax u/s. 41 as disclosed under clause 25 of Form 3CD.
• All the statutory dues have been deposited on time as disclosed under clause 26.
• That during the previous year we have not received any property, being share of a company not being a company in which the public are substantially interested, without consideration or for inadequate consideration as referred to in section 56(2)(viia) under clause 28 of Form 3CD.
• That during the previous year we have not received any consideration for issue of shares which exceeds the fair market value of the shares as referred to in section 56(2)(viib) under clause 29 of Form 3CD.
• That we have not accepted or repaid any amount borrowed on hundi or any amount due thereon in contravention to Section 269SS and 269T of the Act (including interest on the amount borrowed), otherwise than through an account payee cheque, bank draft, Online payments as stated in clause 30 & 31 of Form 3CD.
• That we have not incurred any loss referred to in section 73A of the Act in respect of any specified business during the previous year as stated in clause 32 of Form 3CD.
• That the company is not deemed to be carrying on a speculation business as referred in explanation to section 73 as stated in clause 32 of Form 3CD.
• There are no deductions under Chapter VI A other than those stated in Clause 33.
• The taxes deducted at source by us under the provisions of the Income-tax Act during the year have been paid to the Central Government except those which have been disclosed in Clause 34(a).
• The statement of tax deducted or collected contains information about all transactions which are required to be reported under Clause 34(b) of the Form 3CD.
• Interest payable u/s 201(1A) and 206C(7) of the Act have been paid which have been disclosed in Clause 34(c).
• We certify that stock quantities furnished in Clause 35 of Form 3CD has been valued & certified by us.
• No Cost Audit was carried out during the relevant Assessment year as reported in the clause 37.
• No audit under Central Excise Act was carried out during the relevant Assessment year as reported in the clause 38.
• No audit was conducted under section 72A of the Finance Act, 1994 in relation to valuation of taxable services during the relevant Assessment year as reported in clause 39.
• The basis of calculation of ratios as specified in clause 40 of Form 3CD is correct.
• That there is no demand raised or refund issued during the previous year under any tax laws other than Income Tax Act, 1961 and Wealth tax Act, 1957 as required in Clause 41.
• We also certify information furnished in Clause 1 to 44 & Annexures 1 to ….. of Form 3CD are true and correct.

By order of the Board For Name of company» Sd/- Sd/- Name Name Director Director DIN- DIN- Place:- Date:-

Published by

Gaurav Singla (Associate Manager) Category Income Tax   Report

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