Question

For which of the following matters should an auditor obtain written management representations?

1) Management's cost-benefit justifications for not correcting internal control weaknesses.
2) Management's knowledge of future plans that may affect the price of the entity's stock.
3) Management's compliance with contractual agreements that may affect the financial statements.
4) Management's acknowledgment of its responsibility for employees' violations of laws.

Answer 1

The auditor should obtain written management representations for management's cost-benefit justifications for not correcting internal control weaknesses, management's compliance with contractual agreements that may affect the financial statements, and management's acknowledgment of its responsibility for employees' violations of laws.

Step-by-step explanation:

The matters for which an auditor should obtain written management representations include:

1. Management's cost-benefit justifications for not correcting internal control weaknesses: This helps the auditor understand why certain weaknesses are not being addressed and if they have been properly evaluated.
2. Management's compliance with contractual agreements that may affect the financial statements: This ensures that the entity is fulfilling its obligations and that the financial statements are accurately reflecting these agreements.
3. Management's acknowledgment of its responsibility for employees' violations of laws: This establishes management's acceptance of its responsibility for any illegal actions committed by employees.