Final answer:
The auditor expects to find in a client's management representation letter assertions pertaining to management's compliance with contractual arrangements that impact the financial statements. Suggestions on internal controls or business strategies are not typical for this letter.
Step-by-step explanation:
When an auditor reviews a client's management representation letter, they would expect to find assertions by management related to the financial statements and disclosures. One of the key elements that the auditor would expect to see is management's compliance with contractual arrangements that impact the financial statements, as this compliance is directly related to the fair presentation of the financial statements. Therefore, the correct answer to the question is C) management's compliance with contractual arrangements that impact the financial statements.
The management representation letter usually contains several affirmations, such as the acknowledgement of responsibility for the fair presentation of the financial statements, confirmation that all financial records and related information have been provided to the auditors, and that all significant facts have been disclosed. While suggestions on internal control improvements or business operational strategies like improving product quality and earning per share are important, they are not typical for inclusion in a management representation letter, which is more narrowly focused on representations related to the financial statements and certain aspects of the company's compliance and governance.