1. Charles Ward, the engagement partner, has already completed the Client Acceptance Form in the permanent file....
Question:
1. Charles Ward, the engagement partner, has already completed the Client Acceptance Form in the permanent file. Based on the information you studied in the Permanent File and the unaudited financial statements included in the Current Workpapers (workpapers 1-1 through 1-5), evaluate the client acceptance decision. Organize your answer using the two-column format shown below.
a. Indicate two favorable factors most important to the client acceptance decision (one factor has been provided as an example).
b. Indicate three concerns you have about accepting Oceanview as a client.
2. Indicate whether you agree with the decision to accept the client. Justify your decision, indicating the one or two factors from your response to the first question that had the greatest influence on your decision.
3. The client and our firm have agreed on an initial estimated audit fee of $29,000 (see the engagement letter). However, the estimated total cost of performing this year?s audit is $37,590 (see the fee budget on workpaper 6-5). Discuss possible reasons why a CPA firm might charge a new client an audit fee that is lower than the estimated first-year costs of performing the audit.
4. Auditing standards require auditors who are considering accepting an audit engagement to communicate with the previous auditors.
a. What is the primary purpose of this communication between the new (successor) and old (predecessor) auditors?
b. Why is the client?s permission required before this communication can take place?
c. The successor auditor also often reviews the predecessor auditor?s workpapers. What is the primary purpose of reviewing these workpapers?
The accompanying notes are an integral part of these financial statements
Business and Society Stakeholders Ethics Public Policy
ISBN: 978-0078029479
14th Edition
Authors: Anne Lawrence, James Weber