For which of the following matters should an auditor obtain written management r

Question

For which of the following matters should an auditor obtain written management representations? Select one of the below situations and explain your response.
       (a) Management’s cost-benefit justifications for correcting internal control weaknesses.
       (b) Management’s knowledge of future plans that may affect the price of the entity’s stock.
       (c) Management’s knowledge of allegations of fraud or suspected fraud affecting the entity.
       (d) Management’s acknowledgment of its responsibilities for employee’s violations of laws.

Explanation / Answer

Auditor should obtain written management representations from management of the (c) Management’s knowledge of allegations of fraud or suspected fraud affecting the entity.

As per AU 333 on Management representations In connection with an audit of financial statements presented in accordance with generally accepted accounting principles, specific representations should relate to the following matters:

(1) Financial Matters

(2) Completeness of Information

(3) Recognition, Measurement and Disclosure

(4) Information concerning subsequent events

Recognition, Measurement and Disclosure includes:

Management’s Knowledge of any allegations of fraud or suspected fraud affecting the entity received in communications from employees, former employees, analysts, regulators, short sellers, or others.

and also

Knowledge of fraud or suspected fraud affecting the entity involving (1) management, (2) employees who have significant roles in internal control, or (3) others where the fraud could have a material effect on the financial statements

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.