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 programs.
c. Management representation letter.
d. Preliminary judgment about materiality levels.
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