The atmosphere was tense as the Board of Directors met in July, 19X8. It was the second meeting since a member of Custom Furniture's original family of owners unexpectedly sold his stock to an outsider. For the first time in the company's history, a majority of stock was held by those outside the family group. A new president, John Forth, had been selected by the Board at its June 19X8 meeting. The "family," now the minority stockholders, had objected to displacement of the previous president who they believed was following a prudent marketing policy and producing good financial results. They knew that the new president, along with the new majority stockholders, favored an expansion of the customer base and a possible expansion into new product lines. The new president had been with the company three years as vice president of marketing. Prior to that, he was a marketing manager for an advertising agency. The immediate plans of the Board were to let Mr. Forth continue temporarily as both the president and the person in charge of marketing. The Board had also appointed a new controller named Genna Gentry. Ms. Gentry had previously been employed as an accounting clerk with a local utility company. The major item on the Board's agenda was hiring a CPA firm to perform a variety of services. The new minority stockholders (the traditional family group) opposed any expenditures of this type, arguing that the company was doing fine and had no need for any services offered by a CPA firm. The new majority stockholders were unanimously in favor of expansion. Many of them also believed that "shoddy recordkeeping" had made it difficult to tell "what was really happening in the business." They also argued that an audit at this point would help them secure new capital, both from additional borrowing and possible sale of stock to the public. In addition, Custom had complicated contractual agreements with its salespeople, who had complained about their commissions. The Board asked the new president to contact a CPA firm and pursue the possibility of rendering consulting and auditing services. John Forth called Bill Locat, an old college friend and the managing partner of Locat and Givet. They met for lunch and Mr. Locat described all the services offered by his firm and the qualifications of each staff member. After lunch, Mr. Forth asked Mr. Locat to send a letter to Custom's Board of Directors detailing all the matters they had discussed. Required: Answer the following questions about the content of the letter sent by Mr. Locat to the Board of Directors of Custom Furniture Company. Where applicable, support your answers by refer- encing one or more paragraphs in the above narrative.

a. What services might be needed by Custom Furniture Company? Why would each one be needed?

b. What specific qualifications are needed by the staff of Locat and Givet to render the services described above?

c. What specific quality control measures should Locat and Givet have in place to perform. these services? Why?