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Question No.: 1 You have been appointed as the external auditor of Walton Company Ltd. A management representation letter has been prepared in which the
Question No.: 1 You have been appointed as the external auditor of Walton Company Ltd. A management representation letter has been prepared in which the directors have been asked to confirm that all sales income has been included in the financial statements and that when there is weak evidence of expenditure, the expenditure has been for the benefit of the company and not for the personal benefit of any employee or director. Required (a) Discuss the reliability of audit evidence provided by directors in the management representation letter and whether you should rely wholly on the representations of the directors or whether you should obtain other evidence. (6) Describe the action you would take and the conclusions you would reach if the directors refused to sign a management representation letter. Your answer should specifically consider the statements in the letter concerning completeness of sales income and validity of expenditure
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