Bart James, a partner in the CPA firm of James and Day, received the following memorandum from John Gray, president of Gray Manufacturing Corporation, an audit client of many years.
Dear Bart:
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; we 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 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 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 independent accountants that our operations are the best in the industry as far as preventing pollution is concerned.
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.
Put yourself in Bart James'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.