Drafting a Management Represejitntion Letter L. B. Feldman is completing the June 30, 1999, audit of Carter, Rice, Storrs & Bement, a manufacturer and supplier of paper products. The company has operated successfully since 1948, when it was founded by Charles Carter, still the chief executive officer. The last day of field work is August 2, 1999. During the engagement, Feldman received numerous oral representations, but is particularly concerned with representations relating to:

• Potential irregularities involving management and employees.

• Related party transactions.

• Compensating balances involving restrictions on cash balances.

• Possible violations of state law.

• Loss contingencies.

• Potential unasserted claims or assessments.

Feldman has no evidence to suggest that any of the items listed is necessarily a problem in the Carter, Rice engagement, but she is concerned that the client may not sign a management representation letter because of the potential legal implications if some of the items listed were to occur without management's knowledge.

Required:

1. Draft a management representation letter, including the proper date, addressee, and signatory. The letter should cover only the items listed.
2. How should Feldman proceed if management fails to sign the representation letter?