AUD 4.09 - Written Representations
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True / False: A management representation letter should be obtained at the conclusion of field work but before the date of the auditor’s report.
- A management representation letter is mandatory
- and should be dated the same date as the auditor’s report
Who writes the management representation letter?
The management representation letter is printed on who’s stationary?
What is the real purpose of the management representation letter?
- If called into a court of law, this is the last piece of evidence to confirm everything that management has said or has done with regard to this audit.
- To confirm other representations explicitly or implicitly given to the auditor (for example evidence provided in a conversation would now be put in writing and signed by the management)
What date should be used for the management representation letter?
The same date as the auditor’s report.
If management is unable to sign the management representation letter as of the auditor’s report date, what other means of validation may be used?
Management’s oral confirmation, but a signed representation letter must be received before releasing the auditor’s report.
Who should sign the management representation letter?
The CEO and CFO
What should the auditor to should he conclude that there is sufficient doubt about the integrity of management that the validity of the management representation letter is questionable?
Either a disclaimer of opinion or withdraw from the engagement.
What topics should the management representation letter cover?
- Fair presentation of the FS
- Completeness of the information
- Internal control is in place to detect or prevent fraud, and mgmt’s assessment of the risk
- Compliance (or not) with laws and regulations
- Effects (or not) of uncorrected misstatements
- Status of litigation and claims
- Sufficiency of estimates
- Related party transactions
- Subsequent events
- Additional representations
What particular representations are needed regarding internal controls
- Mgmt is responsible
- States the assertion and the criteria used to evaluate the assertion
- Affirm mgmt did not rely on the auditor’s procedures as the basis for the assertion
- Confirms any significant deficiencies were disclosed to the auditor
- Describes fraud that is material or involves key personnel
- States whether there were any significant changes to internal control after the “as of” date of the report.
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