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Leslie Morgan, CPA, has prepared a letter of representation:
Leslie Morgan, CPA, has prepared a letter of representation for the president and controller to sign. It contains references to the following items:
1. Inventory is fairly stated at the lower of cost or market and includes no obsolete items.
2. All actual and contingent liabilities are properly included in the financial statements.
3. All subsequent events of relevance to the financial statements have been disclosed.
a. Why is it desirable to have a letter of representation from the client concerning these matters when the evidence accumulated during the course of the audit is meant to verify the same information?
b. To what extent is the letter of representation useful as audit evidence? Explain.
c. List several other types of information commonly included in a letter of representation.
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