AICPA CPA-Auditing Exam - Topic 1 Question 33 Discussion

Actual exam question for AICPA's CPA-Auditing exam

Question #: 33
Topic #: 1

Which of the following should be included as a written representation from management?

AThe belief that misstatements identified by the auditor and not corrected are immaterial.

BThe belief that misstatements identified by the auditor and corrected are material.

CThe belief that the auditor is responsible for the fair presentation of the financial statements in conformity with generally accepted accounting principles.

DThe belief that the financial statements are completely accurate in all respects.

Show Suggested Answer

Suggested Answer: A

Choice 'a' is correct. The representation letter should include management's belief that the effects of any uncorrected financial statement misstatements aggregated by the auditor during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole.

Choice 'b' is incorrect. If the misstatements have been corrected, there is no need for management to make representations regarding their materiality.

Choice 'c' is incorrect. Management (and not the auditor) is responsible for the fair presentation of the financial statements in conformity with generally accepted accounting principles.

Choice 'd' is incorrect. Management states its belief that the financial statements are fairly presented in conformity with GAAP. Fair presentation does not mean that the financial statements are completely accurate in all respects, but that they are accurate in all material respects.

by Gail at May 09, 2022, 03:24 PM

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5 months ago

Hmm, this looks like a tricky one. I'll need to carefully read through each statement and think about which ones are correct.

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