CHAPTER 17 - CHAPTER 17 17-7 The auditor obtains a representation letter in order to corroborate oral representations made to the auditor and to

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CHAPTER 17 17-7 The auditor obtains a representation letter in order to corroborate oral representations made to the auditor and to document the continued appropriateness of such representations. The representation letter also reduces the possibility of misunderstanding concerning the responses provided by management to the auditor's inquiries. 17-22 Since the events or conditions that should be considered in the financial accounting for and reporting of litigation, claims, and assessments are matters within the direct knowledge, and often, control of management of an entity, management is the primary source of information about such matters. Accordingly, Harper's audit procedures with respect to the existence of loss contingencies arising from litigation, claims, and assessments should include the following: Inquire and discuss with management the policies and procedures adopted for identifying, evaluating, and accounting for litigation, claims, and assessments. Obtain from management a description and evaluation of litigation, claims, and assessments that existed at the date of the balance sheet being reported on, and during
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the period from the balance sheet date to the date the information is furnished, including an identification of those matters referred to legal counsel, and obtain assurances from management, ordinarily in the form of a representation letter, that they have disclosed all such matters required to be disclosed by generally accepted accounting principles (Statement of Financial Accounting
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This note was uploaded on 11/29/2009 for the course AMIS 627 taught by Professor Johnson during the Spring '08 term at Ohio State.

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CHAPTER 17 - CHAPTER 17 17-7 The auditor obtains a representation letter in order to corroborate oral representations made to the auditor and to

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