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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Reports to those charged with governance and management

Halden Engineering's audit team finishes fieldwork and drafts a management letter. Which statement about management's response and the use of the letter is most appropriate?

The auditor should discuss points with management, invite and record its responses, but keep responsibility for the observations reported. Disputed valid points are not removed, wording need not be agreed, and the letter is not normally sent to shareholders with the financial statements.

  1. AThe auditor should invite management's comments and responses to each point, and include them or note them, while retaining responsibility for the content of the auditor's observationsCorrect
  2. BThe auditor must remove any point management disputes before issuing the letter
  3. CThe auditor should agree the wording of every observation with management so the letter is never challenged
  4. DThe letter should be sent to shareholders with the financial statements

Explanation

Good practice is to discuss findings with management to confirm factual accuracy and invite responses, which are often included in the letter. The auditor still decides what to report and does not delete valid findings because management disputes them. The letter is a confidential communication to management and those charged with governance, not a document for shareholders.

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