Sharon and Josh have already discussed some specific client acceptance issues, such as independence threats and safeguards. Sharon

explains they also must consider the overall integrity of the client $($that is$,$ the management of Cloud $9).$ This means they need to

perform and document procedures that are likely to provide information about the client's integrity.

Josh is a little skeptical. $"$Do you mean that we should ask them if they are honest?" Ssaron suggests it is probably more useful to ask

others, and the key people to ask are the existing auditors. Josh is still skeptical. "The existing auditors are Ellis & Associates. Are they

going to help us take one of their clients from them?" Sharon says the client must give permission first, and, if that is given, the existing

auditor will usually state whether or not there were any issues that the new auditor should be aware of before accepting the work.

This type of communication is covered by AS $2610($AU$-$C $210$ for private company clients$)$ and is part of professional ethics. Sharon

also gives Josh the task of researching Cloud $9\text{'}$s press coverage, with special focus on anything that may indicate poor management

integrity.

Sharon emphasizes they must perform and document procedures to determine whether W&S Partners is competent to perform the

engagement and has the capabilities, time, and resources to do so$.$ For example, they must make sure they have audit team members

who understand the clothing and footwear business. They also must have enough staff to complete the audit on time.

In addition, Sharon and Josh must perform and document procedures to show that W&S Partners can comply with all parts of the code

of professional conduct, not just those that focus on independence threats and safeguards. Finally, they can draft the engagement

letter to cover the contractual relationship between W&S Partners and Cloud $9.$

"Great news!" announces Sharon at the weekly team meeting. $"$We just received word that the audit engagement letter for Cloud $9$

has been signed. We are now officially the auditors, and the risk assessment phase starts now!"