Lancaster & Co

question 21

Multiple Choice

Lancaster & Co.CPAs is auditing the financial statements of Cooper Corporation.During the course of the audit,Cooper Corporation sent the following memo to the engagement partner: We have requested $1 million worth of products from Ladd Corporation with credit terms of net 30 days.Ladd has requested audited financial statements for its credit decision.We notified Ladd that our annual audit was in process and we would provide the audited financial statements to them as soon as they were completed.
Which of the following statements is true with regards to this memo?

• A) The memo is an amendment to the engagement letter and makes Ladd Corporation a primary beneficiary of the audited financial statements.
• B) The memo may move Ladd Corporation closer to a primary beneficiary and reposition them as third party with a standing to sue, depending on the jurisdiction of any future lawsuits.
• C) The memo is only a courtesy and does not alter the terms of the engagement letter or change the nature of Ladd Corporation's standing to sue.
• D) The memo is an additional contract placing Ladd in privity of contract.

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Definitions:

Job Satisfaction

A measure of how content an individual is with their job, which can be influenced by various factors such as work environment, compensation, and alignment with personal goals.

Organizational Commitment

Refers to the psychological attachment an employee has towards their organization, including their willingness to exert effort on behalf of the organization.

Organizational Commitment

The level of dedication an individual has towards their organization, often reflected in their willingness to remain with the organization and exert high effort on its behalf.

Organizational Effectiveness

The degree to which an organization achieves its goals and objectives, efficiently utilizes resources, and adapts to its environment.