AICPA Exam CPA-Auditing Topic 1 Question 33 Discussion

Choice 'a' is correct. The representation letter should include management's belief that the effects of any uncorrected financial statement misstatements aggregated by the auditor during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole.

Choice 'b' is incorrect. If the misstatements have been corrected, there is no need for management to make representations regarding their materiality.

Choice 'c' is incorrect. Management (and not the auditor) is responsible for the fair presentation of the financial statements in conformity with generally accepted accounting principles.

Choice 'd' is incorrect. Management states its belief that the financial statements are fairly presented in conformity with GAAP. Fair presentation does not mean that the financial statements are completely accurate in all respects, but that they are accurate in all material respects.