During the Annual Audit of Ajax Corp

question 863

Multiple Choice

During the annual audit of Ajax Corp., a publicly held company, Jones, CPA, a continuing auditor, determined that illegal political contributions had been made during each of the past seven years, including the year under audit. Jones notified the board of directors about the illegal contributions, but they refused to take any action because the amounts involved were immaterial to the financial statements. Jones should reconsider the intended degree of reliance to be placed on the:

• A) Letter of audit inquiry to the client's attorney.
• B) Prior years' audit plan.
• C) Management representation letter.
• D) Preliminary judgment about materiality levels.

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Definitions:

Meltdown

In nuclear reactors, a severe accident where the nuclear fuel elements fail and release radioactive materials due to overheating.

Air Pollution

The presence of toxic chemicals or compounds in the air, which can harm human health, damage the environment, and cause property destruction.

Livestock Farming

The agricultural practice of breeding and raising animals (such as cows, pigs, chickens) for meat, milk, or other products.

Solid Waste Disposal

The process of handling and disposing of solid wastes from residential, commercial, and industrial sources, typically involving collection, transportation, and landfilling or recycling.