The following questions relate the the auditor's responsibility for obtaining written representations from the client's management. Select the best response.

a. A representation letter issued by a client 

1. Is essential for the preparation of the audit program.

2. Is a substitute for testing.

3. Does not reduce the auditor's responsibility.

4. Reduces the auditor's responsibility only to the extent that it is relied upon.

b. Ajax is an affiliate of the audit client and is audited by another firm of auditors. Which of the following is most likely to be used by the auditor to obtain assurance that all guarantees of the affiliate's indebtedness have been detected?

1. Send the standard bank confirmation request to all of the client's lender banks.

2. Review client minutes and obtain a representation letter.

3. Examine supporting documents for all entries in intercompany accounts.

4. Obtain written confirmation of indebtedness from the auditor of the affiliate.

c. If management refuses to furnish certain written representations that the auditor believes are essential, which of the following is appropriate?

1. The auditor can rely on oral evidence relating to the matter as a basis for an unqualified opinion.

2. The client's refusal does not constitute a scope limitation that may lead to a modification of the opinion.

3. This may have an effect on the auditor's ability to rely on other representations of management.

4. The auditor should issue an adverse opinion because of management's refusal.