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that you are making far too much of a situation involving an immaterial peso amount. They also believe that it is necessary to take any steps to prevent Ultra's management from engaging in illegal activities in the future. Generic's legal counsel indicates that the probability is remote that such an financial statements and internal control for the current year, and you are Your CPA firm is ready to issue the integrated audit report on Generic's industry in combating pollution. To make this publicity more convincing, I would like to retain your firm to study what we have done and to attest as illegal act would not be material to the client's consolidated financial independent accountants that our operations are the best in the industry as Environment 63 statements. Required: regarding this matter. trying to decide on the appropriate course of action regarding the illegal act. a) Discuss the implications of this illegal act by Ultra's management. danger to the environment. We will devote a major part of our annual report to this topic, stressing that our company is the leader of the entire b) Describe the courses of action that are available to your CPA firm c) State your opinion as to the course of action that is appropriate. Explain. Alice Borromeo, a partner in the CPA firm of Jay and Dee, received the following memorandum from Jenny Gomez, president of Gomez' Manufacturing Corporation, an audit client of many years. Dear Alice: I have a new type of engagement for you. You are familiar with how much time and money we have been spending in installing equipment to eliminate the air and water pollution caused by our manufacturing plant. We have changed our production process to reduce discharge of gases; have changed to more expensive fuel sources with less pollution potential; and we have discontinued some products because we couldn't produce them without causing considerable pollution. I don't think the stockholders and the public are aware of the efforts we have made, and I want to inform them of our accomplishments in avoiding Case 6 far as preventing pollution is concerned. 64 Chapter 3 To justify your statement, you are welcome to investigate every aspect of our operations as fully as you wish. We will pay for your services at your regular audit rates and will publish your "pollution opinion" in our annual report to stockholders immediately following some pictures and discussion of our special equipment and processes for preventing industrial pollution. We may put this section of the annual report in a separate cover and distribute it free to the public. Please let me know at once if this engagement is acceptable to you. Sincerely, Jenny Gomez Required: Put yourself in Alice's position and write a reply to this client's request. Indicate clearly whether you are willing to accept the engagement and explain your attitude toward this proposed extension of the auditor's attest function