Final answer:
Representation letters are formal statements by management and must not be considered a substitute for other audit procedures. They should complement and confirm the auditor's findings.
Step-by-step explanation:
The statement 'They often serve as a substitute for the application of other procedures' is not correct relating to representation letters. Representation letters are formal statements from management to the auditor after an audit has been completed, asserting that the information provided is accurate and complete to the best of management's knowledge. These letters are:
- Ordinarily dated as of the date of the audit report
- Signed by members of top management
- Essential in corroborating evidence obtained during the audit, but they do not replace the necessity for the auditor to perform other audit procedures
Therefore, the correct role of representation letters is to complement and confirm the information that the auditor has gleaned from other procedures, and they must not be viewed as a replacement for those procedures.