Clients' written representations regarding inventories, liabilities, and other matters;

              Statements on Auditing
Procedure
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Issued by the Committee on Auditing Procedure, American Institute of Accountants, 13 East 41st Street, New York, N. Y.
Copyright 1941 by American Institute of Accountants
No. 4
March 1941
Clients' Written Representations Regarding Inventories, Liabilities, and Other Matters
INTRODUCTORY NOTE
AN INQUIRY was directed to the committee on auditing procedure last fall relating to the form and content of written representa-tions obtained by practising accountants from their clients with regard to inventories, liabilities, and other matters, and a subcommittee was appointed to look into the matter. The subcommittee has made ex-tensive inquiries and research into the subject in recent months and has submitted a report thereon to the committee. This report contains considerable information which the committee believes will be useful as research material to practising accountants, and the committee has accordingly authorized that it be published for the information of members. The report is reproduced hereunder.
REPORT OF SUBCOMMITTEE ON CLIENTS' WRITTEN REPRESENTATIONS TO AUDITORS
Fifty-two representative accounting firms, large and small, partners of which are members of the Institute, have cooperated with the com-mittee in its effort to make a survey of practice in respect to requiring written representations from clients covering inventories, liabilities in general, and contingent liabilities. Many of the moderate-sized and smaller firms which require written inventory and liability rep-resentations do not have special forms, and these representations are not required in every engagement. There is great variation in what these representations cover and there are several points which are included in the inventory representation by some firms and in the liability representation by others. Obviously, there is little similarity in language in the forms used, but the purpose and the desired effect seem to be fairly uniform.
The practice of requiring a comprehensive written representation covering practically all items on the balance-sheet is limited to some of the larger firms, but the firms which use this type of rep-resentation are of sufficient importance that it is the opinion of the
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