Which of the Following Is Not a Reason Why the Auditor

question 26

Multiple Choice

Which of the following is not a reason why the auditor requests that the client provide a letter of representation?

• A) Professional auditing standards require the auditor to obtain a letter of representation.
• B) It impresses upon management its responsibility for the accuracy of the information in the financial statements.
• C) It provides written documentation of the oral responses already received to inquiries of management.
• D) It determines the type of opinion the auditor will issue on the financial statements.

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Definitions:

Total Stockholders' Equity

The total net values attributed to the owners of a corporation, calculated as the difference between total assets and total liabilities.

Net Assets

The total assets of a company minus its total liabilities, indicating the actual value held by the company's stakeholders.

Fair Value Adjustment

A modification made to the recorded book value of an asset or liability to align with its current market value.

Excess Cost

The amount by which the cost of acquisition exceeds the fair value of the net identifiable assets of a company, often allocated to goodwill or specific intangible assets.