Question 1 You are the auditor of Ice Ltd and are in the process of completing the audit for the year ended 30 June 20X7. There are two outstanding matters highlighted in your firms completion documentation: (i) You have heard rumours that Ice Ltd are planning to merge with a competitor. If accurate, this may have disclosure implications. Management advise you that although they have had several meetings with the management of the competitor in question, no such merger is currently planned. Management have offered to make written representations confirming their intentions. (ii) The invoices to support the cost of a significant purchase of plant and machinery cannot be traced. Management have offered to make written representations confirming the cost of the plant and machinery. Required:

(a) What is the purpose of a management representation letter?

(b) Are the managements written representations sufficient to resolve the two outstanding matters noted above? Please justify your answer