You have been approached by a local lumber producer who specializes in buying logs that have been thinned from the local forests around Las Vegas, NM and turning them into high quality lumber for things like flooring and molding in homes and businesses. The firm is a small, closely held corporation where the founder and his family members hold all the stock and, therefore, does not register with the SEC. You will be doing the first external audit that this firm has had done in its short lifetime. You currently are a member of the AICPA and CPA with a license to practice in New Mexico.
a) Develop a checklist of five areas or issues that you would want to research before you accepted this firm as an audit client and give an example of where you might go to get some information about each issue.
b) Describe three organizations, boards, or groups that have legal authority to regulate aspects of your audit of this client and discuss how that organization, board, or group would regulate your work on this audit.
c) Describe two reasons why this firm may have approached you to do an audit. I am looking for substantive reasons that show you understand the importance of auditing in capital markets.