Discuss AICPA CPA-Auditing Exam Topic 3 Question 27

Which of the following expressions most likely would be included in a management representation letter?

ANo events have occurred subsequent to the balance sheet date that require adjustment to, or disclosure in, the financial statements.

BThere are no significant deficiencies in internal control identified during the prior-year's audit of which those charged with governance are unaware.

CWe do not intend to provide any information that may be construed to constitute a waiver of the attorney-client privilege.

DCertain computer files and other required audit evidence may exist only for a short period of time and only in computer-readable form.

Suggested Answer: A

Choice 'a' is correct. It is appropriate for the representation letter to contain a statement regarding subsequent events.

Choice 'b' is incorrect. The representation letter typically includes information in four categories: financial statements; completeness; recognition, measurement, and disclosure; and subsequent events.

The communication of significant deficiencies in internal control does not fall within these categories.

Choice 'c' is incorrect. The representation letter typically includes information in four categories: financial statements; completeness; recognition, measurement, and disclosure; and subsequent events.

A waiver of attorney-client privilege does not fall within these categories.

Choice 'd' is incorrect. While this may be an accurate statement, it is not something that would be included in the management representation letter. The representation letter typically includes information in four categories: financial statements; completeness; recognition, measurement, and disclosure; and subsequent events.

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8 comments · newest first

Latanya 11 months ago

Not sure about C, that sounds a bit too defensive.

Freeman 12 months ago

I agree with A, it's pretty much a given.

Lenita 12 months ago

Surprised D is even an option, that seems too vague!

Margo 12 months ago

I think B is more common, though.

Shala 1 year ago

Definitely A, that's a standard statement in those letters.

Beatriz 1 year ago

Hmm, this one seems tricky. I'll need to carefully read through the details about the workers' comp program and how it interacts with the group health plan.

Latanya 1 year ago

Antitussives, got it. That was a pretty easy one, in my opinion. As long as you know the basic drug groups, questions like this are pretty straightforward.

Marshall 1 year ago

I think G.729 is often mentioned for low bandwidth situations, so it might be a good fit here, right?

AICPA CPA-Auditing Exam - Topic 3 Question 27 Discussion