Quello Golf Distributors is a relatively small, privately-held golf distributing company handling several product lines including Ping, Callaway, and Taylor-Made in the Midwest. It sells directly to golf shops, pro shops, etc., but 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 thinking of a takeover or a merger with another golf distributorship that operates in many of the same areas.

Required

a. Explain why management might want an independent audit of its financial statements. Identify the specific benefits to Quello Golf Distributors.

b. What are the factors that Quello might consider in deciding whether to seek an audit from a large national public accounting firm, a regional public accounting firm, or a local firm?

c. Is Quello required to have an audit committee? Explain.