1a. The purpose of management letters is to

discuss weaknesses in internal control and other matters discovered in the audit.

make recommendations of substantive procedures to be conducted.

confirm the terms of the audit engagement.

1b.

If inherent risk is high and no assurance has been obtained from controls testing,

extensive substantive procedures need to be performed to estimate the dollar value of any error in the account balance.

the risk of material misstatement is assessed as low.

only overall analytical review procedures need to be performed to reduce detection risk to an acceptable level.

no further substantive testing needs to be performed.

set out the responsibilities of management and the auditor in regards to the audit.

1b.