CIA Question of the Day: Management Representation Letters

Quiz Yazan Ibrahim
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CIA exam practice question — CIA Question of the Day: Management Representation Letters

CIA exam practice question: daily practice for the Certified Internal Auditor (CIA) exam — domain: Part 2: Practice of Internal Auditing.

Question

An internal audit team has completed fieldwork on a financial-controls engagement. Management has declined to provide several third-party confirmations, so the engagement manager considers a management representation letter. According to professional internal auditing practice, which action is most appropriate?

  • A. Treat a management representation letter as sufficient standalone evidence for contested accounting estimates when other evidence is lacking.
  • B. Request a written representation signed only by the head of the audited department if department management provides the assurances.
  • C. Request a written representation signed by senior management (for example, CEO and CFO) dated on the final report; it supplements but does not substitute for other audit evidence.
  • D. Accept oral representations from management about subsequent events if the auditor documents the conversation in the engagement file.
Show the answer and explanation

Correct answer: C. Request a written representation signed by senior management (for example, CEO and CFO) dated on the final report; it supplements but does not substitute for other audit evidence.

Option C is best: professional practice requires written representations from appropriate levels of management (typically senior management) and dated on or near the report date; such letters supplement but do not replace other audit evidence. Option A is wrong because a representation letter alone is not sufficient, especially for contested estimates—auditors must seek corroborative evidence. Option B is wrong because a department head typically lacks the authority to represent on entity-level matters; representations should come from those with overall responsibility. Option D is wrong because oral representations are not an adequate substitute for written, signed representations and are weak evidentially.

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