Management Representation Letters Flashcards

1
Q

T/F: Auditors should always document verbal conversations with management to corroborate verbal responses?

A

True, one of the auditors objectives is to obtain written representations from management that they believe they have fulfilled their responsibility for the preparation and fair presentation of the F/S.

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2
Q

What if management is unwilling to sign the management representation letter?

A

Results in a disclaimer of opinion or withdrawal from the engagement

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3
Q

Who should the management representation letter be addressed to?

A

The auditors

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4
Q

What is the date of the management representation letter?

A

Same date as the audit report

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5
Q

What are some major topics discussed in the management representation letter?

A
  • Materiality
  • Financial statement responsibilities (preparation, fair presentation, design/maintenance of IC, responsibility to detect fraud or error, accounting estimates are reasonable, related party transactions have been disclosed according to US GAAP, uncorrected misstatements are immaterial.

Information provided:

  • Provided auditors access to all necessary information
  • No knowledge of fraud
  • No knowledge of allegations of fraud
  • Disclosed to you all instances of noncompliance with laws and regulations
  • Identified any related parties
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6
Q

Who typically sign the management representation letter?

A

Both CEO and CFO

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7
Q

Can the date of the management representation letter be signed or dated before the audit report?

A

NO!!

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8
Q

What are the two broad categories of the representation letter?

A

1) Financial statements- responsibility

2) Information Provided to auditors

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