Question

In connection with your audit, you request that management provide you with a letter containing certain representations, such as the following:
1. The auditee has satisfactory title to all assets.
2. No contingent or unrecorded liabilities exist except as disclosed in the letter.
3. No shares of the company’s stock are reserved for options, warrants, or other rights.
4. The company is not obligated to repurchase any of its outstanding shares under any circumstances.

Required:
a. Explain why you believe a letter of representation should be provided to you.
b. In what way, if any, do these management representations affect your audit procedures and responsibilities?



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  • CreatedJanuary 09, 2015
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