[startupcfo]

MCQ 705 states

“In connection with an audit of our financial statements, management has prepared, and furnished to our auditors, a description and evaluation of certain contingencies.” The foregoing passage most likely is from:

A.
an audit inquiry letter to legal counsel.

Incorrect B.
a management representation letter.

C.
an audit committee’s communication to the auditor.

D.
a financial statement footnote disclosure.

The program says A is right. Why would an auditor talk about himself in the third person? Wouldn’t the wording make it more likely that this is coming from someone other than the auditors, such as the attorney or the client’s management team?

BEC - 87 | 02/28
REG - 70 | 06/10, REMATCH | 08/30
AUD - XX | 09/10
FAR - XX | 12/10

[Spartans92]

The inquiry letter is from management to the legal counsel and the attorney will reply. The Auditors cannot directly ask the questions themselves.

This would not be in a Mgmt. Rep Letter is because in the rep letter all it would say is that management had made all proper disclosure and whether or not theres any pending litigation that they're aware of. Further inquiries most likely would be needed if necessary from the lawyers. I mean rep letter doesn't make sense to me and the others def dont make sense at all. Sorry if Im not much help.

BEC- PASS

[Missy]

A disclosure is basically the company's management talking to stakeholders and it's their way of saying our auditor required we add this to our financials.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Author]

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