Management Representation Letter in External Audit
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Questions and Answers

What is the primary purpose of a management representation letter?

  • To outline the auditor's responsibilities and scope of work
  • To summarize the audit findings and recommendations for the company
  • To attest to the accuracy and completeness of the financial statements provided to the auditors (correct)
  • To provide the auditors with a legal defense against potential lawsuits

Who is typically required to sign the management representation letter?

  • All members of the company's executive management team
  • The external auditor and the company's board of directors
  • The CEO and the most senior accounting person (e.g., CFO) (correct)
  • The external auditor and the company's legal counsel

When is the management representation letter typically signed?

  • During the audit fieldwork
  • Before the audit fieldwork begins
  • After the financial statements are issued, along with the auditor's opinion
  • After the audit fieldwork is completed, but before the financial statements are issued (correct)

What is the primary role of the management representation letter in the audit process?

<p>To serve as part of the audit evidence used by the auditors (D)</p> Signup and view all the answers

What is the consequence for management if it turns out that the audited financial statements are inaccurate or misleading?

<p>The management representation letter shifts some blame to management (C)</p> Signup and view all the answers

What is the typical practice regarding the issuance of an auditor's opinion without a signed management representation letter?

<p>The auditor typically will not issue an opinion without a signed management representation letter (B)</p> Signup and view all the answers

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