[blueberrycpa]

Ninja MCQ #735

Which of the following matters would an auditor most likely include in a management representation letter?

A.

Communications with the audit committee concerning weaknesses in internal control

B.

The completeness and availability of minutes of stockholders’ and directors’ meetings

C.

Plans to acquire or merge with other entities in the subsequent year

D.

Management’s acknowledgment of its responsibility for the detection of employee fraud

The Answer given is B but shouldn’t the answer be D?

FAR- TBD
BEC - 75
REG - 76
AUD- TBD

[ruggercpa2b]

By reading the question its asking for what is in the management rep letter. The rep letter talks about management acknowledging that the financial statements are fairly presented, that all information has been made available to the auditors and is complete, and that they have made all appropriate disclosures.

Auditor responsibility and manager responsibility are highlighted the engagement letter and the audit report.

AUD - NINJA in Training
BEC - NINJA in Training
FAR - NINJA in Training
REG - NINJA in Training

AUD - 1/6/18
FAR - TBD
REG - TBD
BEC - TBD

AUD - 73, 72 retake 7/2/2016
BEC - 8/20/2016
REG - TBD
FAR - TBD

I am so ready for this nightmare to be over. Been at this way too long.

[blueberrycpa]

so the answer is B? because in gleim to a very similar question the answer is D .

FAR- TBD
BEC - 75
REG - 76
AUD- TBD

[KBinMN]

This is a bit easier w/ experience, seeing that I have been done studying for a while now and I just wrapped up an audit I was sure it was B. It's nice to have the letter on hand too 🙂

D is a tricky answer because fraud is mentioned a bunch of times but “employee” fraud is the main word that should be considered. I assume this would include small asset misappropriation (theft) and would not affect the financials. At least that is how I think about it. The management letter is about what management makes available to you. Here's a nice copy and paste:

We have no knowledge of any fraud or suspected fraud that affects the entity and involves:

o Management,

o Employees who have significant roles in internal control, or

o Others where the fraud could have a material effect on the financial statements.

^this is listed on our rep letter. While this is close, I think answer B makes more sense. You always ask for the minutes.

This is what makes the audit exam so hard. D really could be seen as being correct, IMO B is the “more correct” answer.

[blueberrycpa]

Which of the following matters will an auditor most likely include in a management representation letter?

A. All concentrations of credit risk not expected to change materially within the next year.

B. Plans to acquire or merge with other entities in the subsequent year.

C. Communications with the audit committee concerning weaknesses in internal control.

D. Management’s acknowledgment of its responsibility to detect employee fraud.

And the answer here given is D… A very similar question to the above one

FAR- TBD
BEC - 75
REG - 76
AUD- TBD

[ruggercpa2b]

Sometimes just one or two words can completely change the question. Do you remember what the Gleim question said?

AUD - NINJA in Training
BEC - NINJA in Training
FAR - NINJA in Training
REG - NINJA in Training

AUD - 1/6/18
FAR - TBD
REG - TBD
BEC - TBD

AUD - 73, 72 retake 7/2/2016
BEC - 8/20/2016
REG - TBD
FAR - TBD

I am so ready for this nightmare to be over. Been at this way too long.

[blueberrycpa]

U mean the explanation that Gleim has provided? I don't even see any difference except the choice of minutes availability and does that mean if minutes is available you should first give preference to that?

FAR- TBD
BEC - 75
REG - 76
AUD- TBD

[blueberrycpa]

I have posted the gleim question above.

FAR- TBD
BEC - 75
REG - 76
AUD- TBD

[KBinMN]

There is no answer B from question 1 in the 2nd question. This is why I mentioned “more correct”.

[blueberrycpa]

Ya i guess thats how it should be inferred. But still this is so confusing….

FAR- TBD
BEC - 75
REG - 76
AUD- TBD

[OnMyWay732]

D is not correct because management does not have the responsibility of detecting fraud. What it says is that they have no knowledge of suspected fraud, but there's always that chance that the employee is concealing it.

Choice B is correct because that is literally right in the management rep letter. The letter states that they made all minutes available to the auditors.

AUD - July 2014 - 76
REG - August 2014 - 82
FAR - November 2014 - 78
BEC - January 2015 - 81

DONE!!!!

Used Becker online. Who needs a text when you can burn your eyes out staring at the screen for months on end?

"Let me tell you something you already know. The world ain't all sunshine and rainbows. It is a very mean and nasty place and it will beat you to your knees and keep you there permanently if you let it. You, me, or nobody is gonna hit as hard as life. But it ain't how hard you're hit; it's about how hard you can get hit, and keep moving forward. How much you can take, and keep moving forward. That's how winning is done!"

[Author]

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