Towards the end of an audit, it is common for the external auditor to seek a letter of representation (written representations) from the management of the client company. Required: Explain why it is important to discuss the content of the letter of representation at an early stage during the audit

Discussion of the content of the letter

  • It is important to discuss the contents of the letter at an early stage because directors may disagree with what the auditors wish them to sign.
  •  It is important in such cases for negotiations to take place and the letter to be redrafted until it is acceptable to both auditor and client.
  •  The management representation letter is often regarded as a critical piece of audit evidence and if it is left to a late stage in the audit, when there is pressure on auditors and clients alike, negotiations may be difficult
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