Question

The management representation letter generally contains all of the following items, Except:

A. A statement that management is not aware of any undisclosed contingent liabilities.

B. A statement that the financials are the responsibility of management.

C. A statement that management agrees with the auditor determination of materiality.

D. A statement that management is not aware of any fraud.

Answer 1

Answer : C

A statement that management agrees with the auditor determination of materiality will not be included in Management representation letter.

Because Contents those will be generally included in the Management representation letter are :

• Management is responsible for the proper presentation of the financial statements in accordance with the applicable accounting framework
• All financial records have been made available to the auditors
• Management has made available all letters from regulatory agencies regarding financial reporting noncompliance
• There are no unrecorded transactions
• The net effect of all uncorrected misstatements is immaterial
• The management team acknowledges its responsibility for the system of financial controls
• All related party transactions have been disclosed
• All contingent liabilities have been disclosed
• The company has disclosed all liens and other encumbrances on its assets
• Management is responsible for systems designed to detect and prevent fraud
• Management has no knowledge of fraud within the company

Conclusion : So , Generally Management representation letter will not include Management acceptance of auditor determination of Materiality.