When audit firms do an audit of historical financial statements, part of the audit usually consists of identifying operational problems and making recommendations that may benefit the audit client.The recommendations can be made orally, but they are typically made by use of:
A) a letter of representation.
B) an engagement letter.
C) a client letter.
D) a management letter.

Question

Quizplus · Accepted Answer

The management letter is a document that audit firms use to communicate any operational or internal control problems that they have identified during the audit. The purpose of this letter is to provide recommendations to management on how to improve the company's operations and avoid potential issues in the future. It is not a legal document, but it can be useful to both the auditor and the client in understanding the organization's strengths and weaknesses. Therefore, the best choice is D, a management letter.

When Audit Firms Do an Audit of Historical Financial Statements