Question

Which one of the following is not a purpose of the management representation letter?

a. It clearly documents the audit procedures that were performed by the auditors.

b. It further acknowledges management's responsibility for the financial statements.

c. It confirms oral responses obtained by the auditor earlier in the audit and the continuing appropriateness of those responses.

d. It reduces the possibility of misunderstanding concerning the matters that are the subject of the representations

Answer 1

The management representation letter does not document audit procedures; instead, it acknowledges management's responsibilities, confirms oral responses, and reduces misunderstandings.

Step-by-step explanation:

The management representation letter serves to confirm in writing the information that management has provided to auditors during the audit. The correct answer is a. It clearly documents the audit procedures that were performed by the auditors. This is not a purpose of the management representation letter. Instead, the letter's purposes include acknowledging management's responsibility for the financial statements, confirming oral responses given to the auditor, and reducing the chances of misunderstanding about the representations.