CPA Wishes to Use a Representation Letter as a Substitute

question 7

Multiple Choice

CPA wishes to use a representation letter as a substitute for performing other audit procedures.Doing so:

• A)Violates professional standards.
• B)Is acceptable, but should only be done when cost justified.
• C)Is acceptable, but only for non-public clients.
• D)Is acceptable and desirable under all conditions.

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Definitions:

Correcting Entries

Entries to correct errors made in recording transactions.

Salary Allowance

A predetermined amount paid to employees, which may be part of their salary package, often for specific purposes or expenses.

Net Income

The total earnings of a company after all expenses and taxes have been deducted from revenue, indicating the company's profitability.

Capital Balances

The amount of equity owned by investors or owners in a company or fund.