Key Co. plans to present comparative financial statements for the years ended December 31, Year 1 and Year 2, respectively. Smith, CPA, audited Key’s financial statements for both years and plans to report on the comparative financial statements on May 1, Year 3. Key’s current management team was not present until January 1, Year 2. What period of time should be covered by Key’s management representation letter?
January 1, Year 1, through May 1, Year 3.
The auditor is concerned with events occurring through the date of his/her report that may require adjustment of, or disclosure in, the financial statements. Thus, the representations should be made (1) as of a date no earlier than the date of the auditor’s report and (2) for all periods referred to in the report. Moreover, if current management was not present during all periods covered by the auditor’s report, the auditor should nevertheless obtain written representations from current management for all such periods (AU-C 580).