Question

The management representation letter _______.

A. Can sometimes serve as a substitute for certain audit procedures that were not able to be performed.
B. Is a letter from management to the auditor acknowledging management's responsibility for the preparation of the financial statements.
C. Is a letter from the auditor to management acknowledging management's responsibility for the preparation of the financial statements.
D. Should only be sent to the client's legal counsel; not directly to the client.

Answer 1

The management representation letter is a letter from management to the auditor acknowledging management's responsibility for the preparation of the financial statements.

Step-by-step explanation:

The management representation letter is a letter from management to the auditor acknowledging management's responsibility for the preparation of the financial statements. It is not a letter from the auditor to management as mentioned in option C. The purpose of the management representation letter is to provide written confirmation and evidence of management's acknowledgment and responsibility for the accuracy and completeness of the financial statements.

Option A is incorrect because the management representation letter does not serve as a substitute for audit procedures. It is an additional procedure to support the auditor's understanding and evaluation of the financial statements.

Option D is also incorrect because the management representation letter is sent directly to the client's management, not their legal counsel. This letter is a communication between the auditor and management.