Question

Which of the following statements regarding the letter of representation is not correct?

A) It is prepared on the client's letterhead.
B) It is addressed to the CPA firm.
C) It is signed by high-level corporate officials, usually the president and chief financial officer.
D) It is optional, not required, that the auditor obtain such a letter from management.

Answer 1

The letter of representation is a document prepared by management of a client company during an audit engagement. It is required for the auditor to obtain such a letter from management.

Step-by-step explanation:

The correct statement is option D) It is optional, not required, that the auditor obtain such a letter from management.

The letter of representation is a document prepared by management of a client company during an audit engagement. It is a formal confirmation and representation of management's responsibility for the financial statements and the completeness and accuracy of the financial information provided to the auditors.

Therefore, it is required for the auditor to obtain a letter of representation from management to provide additional evidence and support for the audit. Hence, option D is incorrect as the letter of representation is necessary and not optional.