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					Management Representation Letter




    Sample Management Representation Letter
                  for the Year Ended [date]
Represen tations marked with asterisks (*) are mandatory under Australian Auditing Standards
and must be included in the Management Representation Letter .



                                      (Letterhead of Authority)



[Auditor-General/Name of Director, Financial Audit Services ]
The Audit Office of New South Wales
GPO Box 12
SYDNEY NSW 2001

                                                                                                [date]


                                 Management Representation Letter
                                         [Entity Name]


This representation letter is provided in connection with your audit of the financial statements of
[name of entity] for the year ended [date], for the purpose of you expressing an opinion on the
financial statements.

We acknowledge our responsibility for keeping proper accounts and records, and preparing the
financial statements. We approved the financial statements on [date].

*We acknowledge our responsibility for ensuring the financial statements are fairly presented in
accordance with the:

      Public Finance and Audit Act 1983
      Australian Accounting Standards, including Australian Accounting Interpretations
      Corporations Act 2001 [include if applicable]
      [insert references to other legislation if applicable- For example the State Owned Corporations
       Act 1989]
*We confirm the financial statements are free of material misstatements, including omissions.
We confirm, to the best of our knowledge and belief, the following representations made to you during
your audit.

1      GENERAL

Where the agency has chosen n ot to comply with an Australian Accounting Standard, legal
obligation, etc, and acknowledged this in the financial statements n otes, management n eeds to
disclose the exc eption here. The certification/statement under s ection 41C (1B) or 45F (1B) of
the Public Finance and Audit Act 1983 also needs to disclose d etails of the n on-compliance.

We believe that, in all material respects, the financial statements present a view which is consistent
with our understanding of the [entity name]’s financial position as at [date], and its financial
performance for the year then ended. [Amend wording for consolidated entities so representations
refer to the ‘parent entity and the consolidated entity']

 Select either option as appropriate to the agency.


There have been no deficiencies in financial reporting practices and we have disclosed any changes to
accounting policies in the financial statements. These also include voluntary changes in accounting
policies not arising from initial adoption of an accounting standard or a Treasury mandate.

[OR]

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We have disclosed to you all instances where we have chosen not to comply with an Accounting
Standard or legal obligation. We have made this acknowledgement in our financial statements. There
have been no deficiencies in financial reporting practices and we have disclosed any changes to
accounting policies in the financial statements. These include voluntary changes that did not arise
from initial adoption of an accounting standard or a Treasury mandate.


2      ACCOUNTING RECORDS AND TRANSACTIONS*

We have made available to you:

      all financial records and related data, other information, explanations and assistance necessary
       for the conduct of the audit
      minutes of all meetings (eg Board meetings, Audit Committee or other management meetings)
      all legal issues and legal opinions which have the capacity to be relevant to the fairness of the
       financial statements.
We have properly recorded all transactions in the accounting records. This includes all ‘off-balance-
sheet’ agreements or instruments.


3      COMPLIANCE WITH LEGISLATION AND OTHER REQUIREMENTS

*We have no knowledge of any instances of non-compliance with laws and regulations, contracts or
agreements involving management or employees who have significant roles in internal control.

*We have no knowledge of any breaches or possible breaches of laws and regulations, contracts or
agreements whose effects should be considered when preparing the financial statements.

[OR]

In circumstances where there has been non-compliance with laws and regulations, contracts or
agreements, the above two paragraphs should be replaced with the following:

We have disclosed to you all known actual or possible instances of non-compliance with laws and
regulations, contracts or agreements, and considered their effects when preparing the financial
statements.

In respect to operations during the year, we have complied with:

      all Cabinet and other Government directives, including Ministerial directions issued under ( name
       of Act and the SOC Act)
      all central regulatory agency financial reporting requirements
      all aspects of contractual agreements that would have a material effect on the financial
       statements in the event of non compliance.

We have notified you of any activities or operations conducted which are not specifically required by
[enabling legislation/program statements].

*There have been no communications from regulatory authorities concerning non-compliance with, or
deficiencies in, financial reporting practices that could have a material effect on the financial
statements.




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We have notified you of:

      all our bank accounts and any bank accounts opened, closed or changed during the year (TD
       416.02) [applicable to Departments only]
      all approved variations of authorised payments from the Consolidated Fund (The Annual
       Appropriations Act [current year]) [applicable to Departments only]
      the existence of all controlled entities within one month of their creation (section 63B of the
       Public Finance and Audit Act 1983)
      any transactions or arrangements capable of being regarded as ‘private sector funded
       infrastructure’, outsourcings of significant areas of activity or any other matters dealt with in
       Part 2B of the Public Authorities (Financial Arrangements) Act 1987
      all Cabinet and other Government directives [including Ministerial directions issued under
       (insert name of Act and the SOC Act)].

We have prepared contract summaries for all transactions covered by the ‘Working with Government
policy’ (Treasury Circular 06/25) and submitted these summaries to the Auditor-General for audit
within 30 days of the contract becoming effective.


4      INTERNAL CONTROLS*

We have established and maintained adequate internal controls to ensure we:

      prepare reliable financial statements
      maintain adequate financial records
      record all material transactions in the accounting records underlying the financial statements
      minimise the risk of fraud and error occurring and are able to detect them should they occur
      minimise the risk of significant breaches of legislation and other mandatory requirements
       occurring and detect significant breaches of legislation and other mandatory requirements
       should they occur.


5      FRAUD AND ERROR*

We acknowledge our responsibility for the design and implementation of internal controls to prevent
and detect fraud and error.

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.

Select from either alternative provided below as appropriate to the agency.


We have no knowledge of any fraud or suspected fraud affecting the entity involving management,
employees who have significant roles in internal control or others where the fraud could have a
material effect on the financial statements. Fraud includes misstatements resulting from fraudulent
financial reporting and misstatements resulting from misappropriation of assets.

[OR]

We have disclosed to you our knowledge of any fraud or suspected fraud affecting the entity
involving:

       management
       employees who have significant roles in internal control
       others where the fraud could have a material effect on the financial statements .


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The principal officer of [Agency Name] has reported our knowledge and suspicions relating to fraud
to the Independent Commission Against Corruption as required by s.11 (2) of the Independent
Commission Against Corruption Act 1988.

Select from either alternative provided below as appropriate to the agency.

We have no knowledge of any allegations of fraud, or suspected fraud, affecting the entity’s
financial statements communicated to us by employees, former employees, analysts, regulators or
others.

[OR]

We have disclosed to you our knowledge of any allegations of fraud or suspected fraud affecting the
entity’s financial statements communicated to us by employees, former employees, analysts,
regulators or others.

Only include the c ommentary b elow if applicable to your agency.

We have also disclosed to you any:

       misappropriated cheques where a loss of public moneys seems likely (TD 218.01)
       any losses, defalcations or deficiencies that are of serious proportions or have serious
        implications (TD 455.01).


6       INTERNAL AUDIT

We operate an effective internal audit function and management promptly rectify any shortcomings
reported.

    The commentary below applies only to departments and statutory bodies r equired to c omply
    with TPP09-5 ‘Internal Audit and Risk Management Policy’. This excludes universities and SOCs.
    Although SOCs and universities are not legally obliged to comply with the Policy, such guidance
    should be considered ‘better practice’.

We have appropriate internal audit and risk management practices in place (TPP 09-5) and have
satisfied core requirements specified in the Policy. In particular we have:


       established and maintained an Internal Audit function

       established an Audit and Risk Committee with a majority of independent members and an
        independent chair including at least three members and no more than five members

       ensured the Audit and Risk Committee has a charter consistent with the content of the ‘model
        charter’

       established and maintained an enterprise risk management process appropriate to [entity
        name] and this is consistent with current A ustralian/New Zealand Standards on risk
        management

       ensured the operation of the Internal Audit function is consistent with IIA International
        Standards for the Professional Practice of Internal Audit.


7       FINANCIAL STATEMENTS

We have no plans or intentions that may materially affect the carrying values or classification of assets
or liabilities.


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For-Profit/Not-for Profit Classification

We have considered all aspects in evaluating whether our entity is ‘for-profit’ or ‘not-for-profit’
based on Treasury’s Accounting Policy Distinguishing For-Profit from Not-For-Profit Entities
(TPP 05-4). Our entity’s classification is supported by consideration of:

     statements about the objectives of the entity, such as those contained in legislation,
      regulations, entity constitutions and shareholder resolutions
     the governance framework applied to the entity i.e. the corporate structure
     the purpose, nature and extent of funding, focusing on the extent to which ongoing budget
      support is provided to the entity
     the targeted financial performance of the entity, as agreed between the Government and the
      board/management, focusing on the extent to which the entity funds its expens es, maintains
      its asset base and provides returns
     the classification of the entity under Government Finance Statistics (GFS).

Non-Current Assets

The [entity name] has satisfactory title of all assets. There are no liens or encumbrances on such
assets nor has any asset been pledged as collateral.

We depreciate assets over their useful lives and we have adjusted depreciation charges for all material
abandoned or otherwise unusable items of property, plant and equipment.

Depreciation rates have been reviewed against asset usage and the rate of technical and commercial
obsolescence. Any adjustment to reflect the most recent assessment of the useful lives of all non-
current assets has been recognised and disclosed in the financial statements.

The carrying amount of each physical non-current asset does not materially differ from its fair value
at the end of the reporting period [for all agencies required to apply TPP 07-1, and other entities
that elect to carry assets at valuation].

We have considered the requirements of AASB 136 ‘Impairment of Assets’, when assessing the
impairment of assets and in ensuring no assets are stated in excess of their recoverable amount. We
have communicated to you all indicators of impairment and where these exist, we have conducted
appropriate impairment testing on the relevant asset.

Impairment of Rec eivables

The impairment of receivables is sufficient to provide for any losses on realisation and we have written
off all known bad debts.

Inventories

The [entity name] has no obsolete or excess inventories, and no inventory is stated at an amount in
excess of the net realisable value. We have no plans to abandon lines of product or other plans or
intentions that will result in any excess or obsolete inventory.

Other Current Assets

We expect to realise all other current assets at least at the amounts at which they are stated in the
financial statements.

Liabilities*

*We have recognised all liabilities including those arising under derivative financial instruments in the
financial statements.



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Provisions, Contingent Assets and Conting ent Liabilities *

We have properly recorded and/or disclosed in the financial statements:

        arrangements involving restrictions on cash balances, compensating balances and line-of-credit
         or similar arrangements
        agreements or options to repurchase assets previously sold
        material or contingent liabilities or assets including those arising under derivative financial
         instruments.

Employee Ben efits

All post-employment benefits have been identified and properly accounted for and all events
impacting the plans have been brought to the actuary’s attention.

For defined benefit plans:

        the actuarial assumptions underlying the valuation of the plan are in accordance with the
         [relevant governing body’s] best estimate of future events and are consistent with our
         knowledge of the business
        the actuary’s calculations have been based on complete and up-to-date member information
        the amounts included in the financial statements derived from the work of the actuary are in
         accordance with the requirements of AASB 119 ‘Employee Benefits’.1

Commitments

We have disclosed all material commitments for construction or acquisition of property, plant and
equipment or to acquire other non-current assets, such as investments or intangibles, in the financial
statements.

*We have properly recorded and/or disclosed in the financial statements losses arising from the
fulfilment of, or inability to fulfil, any sale or purchase commitments.

Taxation

We have calculated the income tax expense, current tax liability, deferred tax liability and deferred
tax asset according to the definitions of taxable income and allowable deductions contained in [The
Treasury's guidelines relating to the Taxation Equivalent Regime] [OR] [the 'Manual for the National
Tax Equivalent Regime' released by the Australian Taxation Office].

We have calculated and recognised all other applicable taxes according to relevant tax legislation.

There are no activities that invoke the anti-avoidance provisions of the Tax Equivalent Regime or other
applicable tax legislation.

Related Party Transactions

*We have made available to you all information regarding the identification of related party
relationships and transactions.

We have made available to you details and records relating to:

        any agreements or transactions between employee controlled entities and any of our controlled
         entities/this entity [delete what is not applicable]




1
    Where an actuary is not applicable, make reference to the responsible person performing this role.
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     any equity interests or directorships held by employees in other entities, which are party to,
      directly or indirectly, any agreements or transactions with this organisation and/or any
      controlled entity or related party of this organisation
     any external accounting advice received on these agreements, transactions or interests.

*We believe the related party disclosures in the financial statements are adequate. We believe related
party transactions and related amounts receivable or payable, including sales, purchases, loans,
transfers, leasing arrangements and guarantees (written or oral) have been properly recorded and/or
disclosed in the financial statements in accordance with Australian Accounting Standards. [include
where it is a ‘for profit’ entity]

Key Management Personnel Disclosures

We have indentified all the agency’s key management personnel and have disclosed all remuneration
benefits received during the year. We believe that disclosures in the financial statements are complete
and in accordance with Australian Accounting Standards.

Accounting for Investments in Associates

We have made available to you details and records relating to the existence and ownership of all
equity interests held in associates (i.e. all entities over which [entity name] has significant influence).

Accounting for Investments in Joint Ventures

We have made available to you details and records relating to the existence of all our ownership
interests held in any joint venture operation.

Environmental Issues

We have considered whether environmental matters could have a material impact on the financia l
statements and conclude that:

     we are not aware of any material liabilities or contingencies arising from environmental matters,
      including those resulting from illegal or possibly illegal acts
     we are not aware of environmental matters that may result in a material impairment of assets
     where we are aware of such matters referred to in the two points above, we have disclosed to
      you all facts relating to those matters.

Accounting Misstatements Detected by Audit*

Management or where appropriate, thos e charged with governance, must provid e written
representation regarding all uncorrected misstatements. A summary of the misstatements other
than those which the audit team has determin ed to b e clearly trivial, must be included below
or attached to this document.

We acknowledge that the attached schedule of uncorrected misstatements has been brought to our
attention and we have considered the impact on the financial statements. We conclude these
misstatements are quantitatively and qualitatively immaterial to the financial statements taken as a
whole, when considered individually or in aggregate.

We have also considered the impact of uncorrected misstatements from previous periods and conclude
the aggregate amount of these misstatements is immaterial to the previous and current periods’
financial statements.

Prior Period Errors Indentified in the Current Year

Only include if material prior period errors have b een identified by management in the current
year requiring adjustment to the financial statemen ts.


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We have advised you of, and adjusted the financial statements for, all material misstatements that we
have identified from previous periods.

Native Title Land Claims

Delete the option which is irrelevan t in the s ection b elow.

We have advised you all of the facts of native title land claims that may have a material impact on the
financial statements.

[OR]

We are not aware of any native title land claims that may have a material impact on the financial
statements.

Insurance

We have established procedures to assess the adequacy of insurance cover on all assets and insurable
risks, and where appropriate, assets and insurable risks are adequately covered by insurance.

Litigation and Claims

We have provided to you all information regarding material outstanding legal matters.

*We have properly recorded and/or disclosed in the financial statements unasserted claims or
assessments that our lawyer(s) has advised us are probable of becoming a legal matter.

Accounting Estimates

*We confirm the significant assumptions used in making accounting estimates are reasonable and have
been disclosed in the financial statements.

We confirm the measurement processes, including related assumptions, used by management to
determine accounting estimates in the context of the applicable financial reporting framework are
appropriate and have been consistently applied.

We confirm the disclosures related to accounting estimates are complete and appropriate.

Fair Value Measurements and Disclosures

*Where assets and liabilities are recorded at fair value, the value attributed to these assets and
liabilities is, in the opinion of the [relevant governing body], the fair value.

*We confirm the significant assumptions used in fair value measurements and disclosures are
reasonable, and appropriately reflect our intent and ability to carry out specific courses of action on
behalf of [entity name].

We confirm the measurement methods, including related assumptions, used by management in
determining fair values within the applicable financial reporting framework are appropriate, and have
been consistently applied.

We confirm the disclosures related to fair value in the financial statements are complete and
appropriate.

Going Concern

We confirm the going concern basis is appropriate for the financial statements.




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Events After End of the Reporting Period

*No events have occurred between the end of the reporting period to the date of this letter that would
require adjustment to, or disclosure in, the financial statements.

Electr onic Presentation of the Audited Financial Statements and Audit Report

With respect to publication of the financial statements on our website, we acknowledge:

      we are responsible for the electronic presentation of the financial statements
      we will ensure the electronic version of the audited financial statements and the Independent
       Auditor’s Report on the website will be identical to the final signed hard copy version of the
       audited financial statements which bears the Auditor-General's seal and the Independent
       Auditor’s Report
      we will clearly differentiate between audited and unaudited information in the construction of
       the website as we understand the risk of potential misrepresentation between unaudited and
       audited information in the absence of appropriate controls
      we have assessed the controls over the security and integrity of the data on the website and
       that adequate procedures are in place to ensure the integrity of the information published
      we will ensure that where the Independent Auditor’s Report on the financial statements is
       published on the website, the financial statements are also published in full.

Overseas Subsidiaries

We have obtained all necessary information from subsidiaries that are not subject to Accounting
Standards in Australia, and made appropriate adjustments to the information to enable the
preparation of the financial statements.

Impairment of Financial Assets

We have reviewed all our financial assets for the indicators of impairment.

Select from either option as appropriate to the ag ency.

We have no reason to believe these assets may be impaired at balance date.

[OR]

We have identified and disclosed all impaired assets at balance date and have adjusted our
accounts accordingly.

We have also reviewed financial assets previously written down as impaired for circumstances
indicating that impairment may no longer exist in the current year. We have adjusted our financial
statements appropriately in accordance with accounting standards.

Financial Instruments

We have notified you of all reclassifications of financial instruments made during the year together
with explanations, in accordance with the requirements of Australian A ccounting standards.

Agencies entering into derivative instrument transactions may be required to make a dditional
representations about these transactions. Example representations are included in Auditing and
Assurance Guidance Statement AGS 1030 ‘Auditing Derivative Financial Instruments’ para 92.




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Other

Additional management representations should be considered for inclusion where the following
situations exist:
 other information included in the financial statements (due to other statutory requirements)
 opinions and/or representations by management included in the notes to the financial
    statements (eg: the anticipated outcome of litigation)
 environmental matters
 compliance with laws and regulations (where the audit is required to report on this or where
    the financial statements are required to be prepared in accordance with a prescribed Act – eg:
    compliance with the State Owned Corporations Act) or
 other matters (change in accounting policy or when the work of a specialist is used).
Refer to ASA 580 Appendix 1 for illustrative examples of representations.

Audit teams should include in this section all other issues not addressed elsewhere as relevant to
the audit.

We confirm the above representations are made on the basis of adequate enquiries of management
and staff (and where appropriate, inspection of evidence) sufficient to satisfy ourselves that we ca n
properly make each of the above representations to you.

We understand your examination was made in accordance with Australian Auditing Standards and was,
therefore, designed primarily for the purpose of expressing an opinion on the financial statements of
the entity taken as a whole, and your tests of the financial records and other auditing procedures were
limited to those you considered necessary for that purpose.




..................................................................
Chief Executive’s Title




..................................................................
Chief Financial Officer’s Title




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