Final answer:
A letter of representation is management's written confirmation of responsibility for financial statements, considered reliable evidence in an audit. It reaffirms information provided to auditors, but they also seek corroborating evidence from other sources.
Step-by-step explanation:
The correct statement is: A letter of representation is documentation of management's acceptance of responsibility for the financial statements and is deemed to be reliable evidence. This document is a part of audit documentation and serves as a written confirmation of oral representations given to the auditors, reinforcing the evidence auditors obtain during the audit process. A letter of representation is taken as evidence because it formally confirms the management's responsibility for the preparation of the financial statements and reaffirms the veracity of the information provided to the auditors. However, it is essential to consider that while it is deemed reliable, auditors also gather corroborating evidence from independent sources to form a sound basis for their audit opinion.