Ajax,Inc,Is an Affiliate of the Audit Client and Is Audited

question 4

Multiple Choice

Ajax,Inc.,is an affiliate of the audit client and is audited by another audit firm.Which of the following is most likely to be used by the auditor to obtain assurance that all guarantees by the client of the affiliate's indebtedness have been detected?

• A) Send the standard bank confirmation request to all the client's lender banks.
• B) Review client minutes and obtain a representation letter.
• C) Examine supporting documents for all entries in intercompany accounts.
• D) Obtain written confirmation of indebtedness from the auditor of the affiliate.

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Definitions:

Earnings Loss

The reduction in an individual's or entity's income, which can result from factors like unemployment, underemployment, or business downturns.

Destructive Stress

Impairs the performance of an individual.

Constructive Stress

Acts in a positive way to increase effort, stimulate creativity and encourage diligence in one’s work.

Job Burnout

Physical and mental exhaustion that can be incapacitating personally and with respect to work.