Management Rep Letter
a. Management acknowledges that there are no material weaknesses in the internal control.
b. Sufficient audit evidence has been made available to permit the issuance of an unmodified (unqualified) opinion.
c. Compensating balances and other arrangements involving restrictions on cash balances have been disclosed.
d. Management acknowledges responsibility for illegal actions committed by employees.
This answer is correct because the professional standards include information on compensating balances and other cash balance restrictions as items for which the auditor ordinarily obtains written representations.
a. “Sufficient audit evidence has been made available to the auditor to permit the issuance of an unmodified opinion.”
b. “There are no unasserted claims or assessments that our lawyer has advised us are probable of assertion and must be disclosed.”
c. “We have no plans or intentions that may materially affect the carrying value or classification of assets and liabilities.”
d. “No events have occurred subsequent to the balance sheet date that would require adjustment to, or disclosure in, the financial statements.”
This answer is correct, that is, not included, because while the chief executive officer and the chief financial officers must make information available to the auditor, they do not make a judgment on whether evidence is sufficient.
management should provide a representation related to such subsequent events.
a. Length of a material contract with a new customer.
b. Information concerning fraud by the CFO.
c. Reason for a significant increase in revenue over the prior year.
d. The competency and objectivity of the internal audit department.
This is correct because auditors must obtain a representation that those signing the letter have no knowledge of fraud or suspected fraud committed by (1) management, (2) employees who have significant roles in internal control, or (3) others where the fraud could have a material effect on the financial statements.
a. Compliance report.
b. Management representation letter.
c. Letter for an underwriter.
d. Report on internal controls.
This answer is correct because the professional standards require that the auditor obtain such a statement in the management representation letter.
a. February 13, year 2.
b. February 17, year 2.
c. March 24, year 2.
d. March 28, year 2.
This answer is correct because the management representation letter should be dated no earlier than the date of the auditor’s report and is normally the same date as the auditor’s report. The auditor’s report is dated when sufficient appropriate audit evidence has been obtained, March 24, year 2, in this case.
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