Which of the following is true regarding the 'Management Representation Letter'?

Answer options:

It relieves the auditor of responsibility for detecting fraud.

It is the primary source of evidence for the audit.

It is not a substitute for the application of other audit procedures.

It is optional for non-issuer audits.

How to approach this question

Rep Letter = 'I promise it's true'. Auditor Job = 'Verify it's true'. The letter doesn't replace the work.

Full Answer

C.It is not a substitute for the application of other audit procedures.✓ Correct

Management representations are part of audit evidence but are not sufficient appropriate audit evidence on their own. They complement other procedures but do not substitute for them.

Common mistakes

Thinking the Rep Letter is strong evidence (it's actually weak/internal evidence).

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