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Unformatted text preview: inventory items have a nominal net effect on the financial statements. To gain management's favor in this negotiation, it may be wise to allow the cutoff items to pass and concentrate the negotiation on the pension expense, which has a large effect on liabilities. However, as discussed earlier, the SEC is placing more pressure on auditors to require clients to adjust any intentional misstatements. Client Representation Letter SAS 85 AU 333 The auditor must obtain a letter from the client documenting the client’s representations during the engagement. The primary purposes are to: - confirm and document oral statements - reduce auditor-client misunderstanding - remind management of responsibilities The letter should be signed by the client CFO and CEO and dated with the field work completion date. If the client refuses to give the auditor a representation letter, the auditor should qualify or disclaim an opinion...
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- Fall '08
- Balance Sheet, pension expense, cutoff items