4.16 - MANAGEMENT REPRESENTATION LETTER AND ATTORNEY LETTER Flashcards
4.16 - MANAGEMENT REPRESENTATION LETTER AND ATTORNEY LETTER
A letter from the client’s attorney:
A) Corroborates evidence already obtained through the client.
B) Results from a request from the auditor.
C) Is the primary source of evidence an auditor obtains about litigation, claims, and assessments.
D) Is always required if the auditor is to express an opinion
A) Corroborates evidence already obtained through the client.
The primary source of evidence about litigation, claims, and assessments results from inquiries made of the client.
A letter to the client’s attorney identifies the information provided by management and requests the attorney’s corroboration.
While the client generally initiates the request for the letter, it is mailed directly to the auditor and is not obtained by the client on the auditor’s behalf.
An attorney’s letter is not required if, as a result of audit procedures already applied, including inquiries of
management, the auditor has concluded that there are no actual or potential litigation, claims, or assessments.
4.16 - MANAGEMENT REPRESENTATION LETTER AND ATTORNEY LETTER
The refusal of a client’s attorney to provide information requested in an inquiry letter generally is considered
A) Reason to withdraw from the engagement.
B) Equivalent to a significant
deficiency.
C) Grounds for an adverse opinion.
D) A limitation on the scope of the audit.
D) A limitation on the scope of the audit.
If a client’s attorney refuses to provide information requested, it represents a scope limitation and the auditor will have
to determine if sufficient appropriate audit evidence can be obtained by other means.
It does not necessarily mean that the financial statements are not fairly presented, requiring an adverse opinion.
The auditor would likely only consider withdrawal if the client refused to request the information from the attorney, not if the attorney refused to respond.
The attorney’s refusal is not
within the internal control of the entity and would not represent a control deficiency, significant or otherwise
