The Management Letter

question 14

Multiple Choice

The management letter:

• A) spells out to the audit committee the auditor's responsibilities under generally accepted auditing standards.
• B) must follow the format prescribed by the ASIC.
• C) is optional and is intended to help the client operate its business more effectively.
• D) is required by ASA 580 whenever there are 'reportable conditions'.

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Definitions:

1913

A year notable for several key historical events, including the ratification of the 16th Amendment to the U.S. Constitution, introducing the federal income tax.

Excess Reserves

Banks' reserves that exceed the minimum reserve requirements set by central banking authorities, indicating additional liquidity.

Actual Reserves

The total amount of funds that a bank has held in reserve, both required and excess, to meet its liabilities.

Required Reserves

Minimum vault cash or reserves; held at the Federal Reserve District Bank.