Question

Which of the following statements is false with respect to management representation letters on a review engagement?

a. Management representation letters are optional in a review engagement.
b. Management representation letters confirm oral representations made to the auditor.
c. Management representation letters provide evidence about the financial statements.
d. Management representation letters are obtained in writing from management.

Answer 1

The false statement is that management representation letters are optional in a review engagement; they are, in fact, mandatory.

Step-by-step explanation:

The false statement with respect to management representation letters on a review engagement is: a. Management representation letters are optional in a review engagement. The correct information is that management representation letters are a mandatory requirement in a review engagement, not optional. These letters serve as a formal statement from management confirming the accuracy of information provided to the auditors. They confirm oral representations made to the auditor and provide additional evidence about the financial statements and assertions made therein. Furthermore, they are always obtained in written form from management.