What is the management representation letter, and must I sign it?
It is a written statement from management to the auditor confirming key matters, such as that all records were provided and transactions disclosed. The auditor needs it as audit evidence and will not issue the report without it; it cannot replace other evidence.
What it is HKSA 580 requires written representations from management in the form of a representation letter addressed to the auditor.
Typical content
- Management accepts responsibility for the financial statements and internal control.
- All records and information were made available to the auditor.
- All transactions are recorded, and related parties and their transactions are disclosed.
- Known or suspected fraud, non-compliance and post year-end events have been disclosed.
- Plans and ability to continue as a going concern.
Dating The letter is dated as near as practicable to, but not after, the date of the auditor's report (HKSA 580 para 14).
Can the auditor rely on it alone? No. Representations are audit evidence but cannot replace other evidence. If management refuses to sign, the auditor must consider whether this affects their reliance on management's integrity and the opinion, and must disclaim an opinion if management does not provide the required representations (para 20).
Practical points
- Read it before signing; the directors are making statements to the auditor.
- Signing something you know is untrue is risky; a materially false or misleading statement to an auditor can be an offence under s.413(3) of the Companies Ordinance.
Legal basis
- HKSA 580 Written Representations
- Companies Ordinance (Cap. 622), s.413(3)
Sources
Applies to 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- Does every Hong Kong limited company need an audit?Yes. Every Hong Kong company must have an auditor for each financial year and its financial statements audited, whatever its size or whether it trades. The only company that escapes is a qualifying private company that has validly become dormant under s.5 and s.447 of the Companies Ordinance.
- Do I still need an audit if my company had no revenue or no business activity?Yes, unless the company has formally become dormant. Having no sales does not make a company dormant in law. If it had any expenses, bank charges or other recorded transactions, the audit duty continues for that year.
- My company is loss-making. Do I still need to audit it?Yes. Profit or loss has no bearing on the audit requirement. A loss-making company is audited every year, and the auditor will also look closely at going concern.
- How do I make my Hong Kong company dormant to avoid the audit?Check the company qualifies, pass a special resolution declaring it will become dormant from a stated date, and have the directors deliver that resolution to the Companies Registrar. Dormancy takes effect from the delivery date or the later date in the resolution.
- Does a dormant Hong Kong company still have to file a profits tax return?Dormancy under the Companies Ordinance relieves the company from audited accounts, and IRD accepts a profits tax return from it without the audited statements. It does not by itself cancel the duty to file a return when IRD issues one.