Why does a recent or upcoming IPO create more risk for the auditor? Which audit firms seem best positioned to accept the risk? Which audit firms likely have the greatest expertise with that type of client? What would be the ultimate outcome if the most qualified audit firms turn down companies with IPOs because they do not want the risk, and the companies must use audit firms with less experience and expertise? How does this scenario fit in with protecting the public interest?
Answer to relevant QuestionsWhy would an auditor be concerned about a potential client with an overworked accounting staff? With a potential client that has had multiple turn-over of people in top accounting positions?What is an RFP? Who issues an RFP? What information can the auditor expect to obtain from a company’s RFP? Ellis & Jarrick, CPAs, received a RFP from the audit committee of the board of directors of Lunar Mills, Inc. to perform an audit of the company’s financial statements for the year ended December 31, 2009. In connection ...Why might an auditor be concerned if all of the company’s management authority is centered in one or two individuals?What is an engagement letter, and what are its contents?
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