Question

Key Co. plans to present comparative financial statements for the years ended December 31, 2010 and 2011, respectively. Smith, CPA, audited Key's financial statements for both years and plans to report on the comparative financial statements on May 1, 2012. Key's current management team was not present until January 1, 2011. What period of time should be covered by Key's management representation letter?

a. January 1, 2010 through December 31, 2011.
b. January 1, 2010 through May 1, 2012.
c. January 1, 2011 through December 31, 2011.
d. January 1, 2011 through May 1, 2012.

Answer 1

The management representation letter should cover the period from d) January 1, 2011 through May 1, 2012.

Step-by-step explanation:

The management representation letter should cover the period from January 1, 2011 through May 1, 2012. This is because Key Co.'s current management team was not present until January 1, 2011, so they are responsible for the financial statements from that point forward.

The audit report is being issued on May 1, 2012, so the management representation letter should cover the period up until that date.