Management of AllTech,Inc.refuses to sign the management representation letter given to them in the course of the audit on the grounds that it invades the company's privacy.What does this refusal constitute?
A)A violation of full and fair disclosure.
B)A securities law violation.
C)A scope limitation.
D)A breakdown in internal controls.

Question

Quizplus · Accepted Answer

The refusal to sign the management representation letter constitutes a scope limitation as it indicates that the auditors were unable to obtain sufficient evidence regarding the management's representation on the financial statements and related disclosures. The management representation letter is a standard audit procedure that helps the auditors gather appropriate audit evidence and maintain the overall quality of the audit process. The management's refusal to sign it can compromise the auditors' ability to perform an adequate audit and can result in a disclaimer of opinion or an adverse opinion on the financial statements.