You are a manager at an LMN accounting firm. The directors of Platinum Products Pty Ltd have approached your firm to conduct an audit of the financial statements for the year ended 30 June 20X8 and provide a report.

Platinum Products Pty Ltd is an Australian-based manufacturer of Chunks. Chunks are a component in nuclear power plants only manufactured by the government of Ashnovia, a small country in the Southern Ocean.

The United States is currently considering trade and other sanctions against Ashnovia because there are fears internationally that the dictator of Ashnovia is using the component parts purchased (purportedly for nuclear power plants) for the production of nuclear weaponry.

The company is owned by a single shareholder, Sally Brand. Sally began the business two years ago after meeting the trade minister for Ashnovia on one of her frequent visits to the country.

Sally is lovely but has had a few unfortunate events during her life. One event happened 15 years ago when she was arrested in another country (with a weapon and $75,000 US dollars in cash) and charged with conspiring to import illegal substances into Australia. Unfortunately, she spent 5 years in prison in the overseas country.

Platinum Products is managed by James Meyer (James is the husband of a senior partner of your accounting firm). James is a very nice person and is much loved by the employees of Platinum Products.

The year ended 30 June 20X8 is the second year of the company's operations. The financial statements for the year ended 30 June 20X7 were not audited.

Other Information

Mary Springer runs the finished goods warehouse. She is responsible for keeping all finished goods inventory records and prepares the sales invoices and delivery dockets when goods are sold to the customers.

Pete Gilbert oversees accounts payable. He creates new creditors in the system, records purchase invoices when they come in, and is responsible for paying the creditors. Pete also does the bank reconciliation because everyone else is too busy to do it and he is an expert at them.

Required:

Provide a report to the audit partner explaining your recommendation as to whether your firm should accept Platinum Products Manufacturing Pty Ltd as a client. As part of your recommendation, you should include the following:

1. The type of assurance engagement that has been requested by Platinum Products;
2. The factors from the background information that you have considered in your recommendation;
3. Explanation of the impact of the ethical framework on your recommendation;
4. Explanation of the impact of relevant standards and regulations on your recommendation;
5. Consideration of your potential legal liability as an auditor;

The report should be presented as a business report, including a short introduction and conclusion stating your recommendation. Whilst referencing is not necessarily standard practice in a business report, please employ academic referencing in your report. It is expected that the report should be between 1,000 and 1,200 words. The table below presents the marking criteria (out of 40) for the report. See attached for the detailed rubric.

Marking criteria
1	Analyze concepts and principles and the regulatory and ethical requirements of auditing
2	Interpret auditing concepts and principles and the regulatory and ethical requirements of auditing
3	Apply auditing concepts and principles and the regulatory and ethical requirements of auditing

Answer rating: 100% (QA)

Introduction The type of assurance engagement that has been requested by Platinum Products is an external audit The purpose of an external audit is to provide an independent opinion on the financial s... View the full answer