You are performing the audit of Toledo Ltd. for the financial year ended December 31, 2020. Under the terms of a major loan contract, Toledo is required to maintain certain financial ratios. If the ratios are breached, then the loan is immediately due for repayment. This would create significant cash flow problems. To comply with the loan covenant and maintain the ratios, Toledo must continue to hold its 100-percent shareholding in Granada Ltd. as a long-term investment. You have obtained a management representation letter from the client, which says in part: Toledo Ltd. warrants for the period January 1, 2020, to December 31, 2020, that it intends to retain ownership of its entire parcel of ordinary shares in Granada Ltd. Toledo has not entered into any discussions with any party, directly or indirectly, regarding the sale of these shares. On February 24, 2021, you noted an article in the financial press that described the rumoured sale of Granadas business assets to a foreign investor. Which of the following is accurate regarding the steps the auditor should perform with regard to evidence gathered through a management representation letter?

Attempt to corroborate the evidence with inquiry of management

Evaluate whether the representation is consistent with other information

No further steps are required to verify evidence if a management letter is signed

Consider the reputation and knowledge of the individual signing the management representation letter

Review only external sources of information to support representations made by management