Final answer:
Management's refusal to provide written representations can limit the scope of an audit and pose challenges for auditors (a). This can impact the gathering of evidence and the auditor's ability to support their opinions on financial statements. It may also raise concerns about management's commitment to transparency.
Step-by-step explanation:
Management's refusal to furnish written representations can be seen as a limitation on the scope of the audit. Written representations are important because they provide evidence and confirmation of management's assertions. When management refuses to provide written representations, it restricts the auditor's ability to gather necessary information and perform a thorough audit.
This limitation can have consequences for the audit process, as the auditor may not be able to obtain sufficient evidence to support their opinions on the financial statements. Without written representations, the auditor may need to rely on other sources of evidence or perform additional audit procedures to compensate for the lack of documentation.
In some cases, management's refusal to provide written representations may raise concerns about their commitment to transparency and their cooperation with the audit process. While it may not be a reason in itself to terminate the audit, it can be a red flag that warrants further investigation and consideration of the overall reliability of the financial statements.