What it is
A contractor’s estimates to complete rest on management’s judgment. The representation letter confirms that the estimates were made in good faith, include approved and pending change orders, and that losses on contracts are fully provided for.
This supplement covers contracts, work in process and estimates, then bonding, financing and compliance.
When to use it
- Audits of contractors recognizing revenue over time.
- Alongside the general representation letter.
- When a surety or lender requires specific representations.
What’s inside
- WIP schedule, estimate and revenue method representations
- Loss provisions, change orders, claims and retainage
- Bonding, indemnity and covenant representations
- Joint ventures, compliance and related party representations
Standard cited
This template follows AU-C 580 / ASC 606. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 580 explained.
Questions
Does it replace the general letter?
No. Use it with the general letter.
Does it cover revenue methods other than cost to cost?
The bracket in the revenue method representation can be changed to another method.
Related templates
- Management Representation Letter (AU-C 580)
- Construction Job Cost and Percent Complete Audit Program
- Audit Planning Memo: Construction Contractor
- Surety Confirmation Letter for a Construction Audit
Last updated 11/06/2026. All free templates.