Which of the following is true regarding the 'Management Representation Letter'?

Answer options:

It relieves the auditor of responsibility for detecting fraud.

It is the primary source of evidence for the audit.

It is not a substitute for the application of other audit procedures.

It is optional for non-issuer audits.

How to approach this question

Rep Letter = 'I promise it's true'. Auditor Job = 'Verify it's true'. The letter doesn't replace the work.

Full Answer

C.It is not a substitute for the application of other audit procedures.✓ Correct

It is not a substitute for the application of other audit procedures.

Management representations are part of audit evidence but are not sufficient appropriate audit evidence on their own. They complement other procedures but do not substitute for them.

Common mistakes

Thinking the Rep Letter is strong evidence (it's actually weak/internal evidence).

Question 74 All questions Question 76

Practice the full CPA AUD Practice Exam

78 questions · hints · full answers · grading

More questions from this exam

Q01A CPA firm is auditing a large public company. The audit partner's spouse has just been promoted ...Hard Q02During the acceptance phase of a new audit engagement for a private company, the successor audito...Hard Q03A CPA firm is designing its system of quality control. Which of the following policies would most...Medium Q04An auditor is establishing an understanding with a client regarding the services to be performed ...Medium Q05Under the AICPA Code of Professional Conduct, which of the following fee arrangements is prohibit...Medium

View all 78 questions →