Green Day Golf Distributors is a relatively small, privately held golf distributing company that operates in the Midwest and handles several product lines, including shoes, clothing, and golf clubs. It sells directly to golf shops and does not sell to the big retailers. It has approximately $8 million in sales and wants to grow at about 20% per year for the next five years. It is also considering a takeover or a merger with another golf distributorship that operates in the same region.
a. Explain why management might want an independent audit of its financial statements.
b. What are the factors that Green Day might consider in deciding whether to seek an audit from a large national audit firm, a regional audit firm, or a local firm?
c. What types of users might be interested in Green Day’s financial results?