CMA Final · Cost and Management Audit · Cost Auditing and Assurance Standards
According to SCA 103, how should a cost auditor treat management representations when forming the audit opinion?
Management representations are not a substitute for sufficient appropriate audit evidence. SCA 103 requires professional skepticism, so the cost auditor must not accept less-than-persuasive evidence merely because management and those charged with governance are believed to be honest and have integrity.
- AThey can replace other evidence if management is known to be honest
- BThey are sufficient when the cost statements are small in value
- CThey are not a substitute for obtaining sufficient appropriate audit evidenceCorrect
- DThey are required only for related party transactions
Explanation
Under professional skepticism, SCA 103 says the auditor should not be satisfied with less-than-persuasive evidence on a belief that management is honest. Representations from management are not a substitute for sufficient appropriate audit evidence.
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