Problem
You have recently joined the accounting firm Comtois, Benoit and St. Law, LLP a midsized accounting firm. You were first assigned to Annabelle Payment, an audit partner. She asked you to complete a preliminary assessment on a potential client and provide a summary of your evaluation and a recommendation on the actions the firm should take concerning the prospective client. Hint: You must provide your own public corporation model and apply your learning and understanding of the work that is required of public accountants before deciding to accept or reject the prospective client (e. g. provide your own perspective profile of the potential client, upper management, and current auditor - (Do not copy existing publication(s) of corporate annual report). As you are playing the role of the new public accountant (PA), this will be part of student's demonstrated professional skepticism and ability to exercise professional judgment using own perception of the profile of a potential client, its key officers/executives, and the governing body of the target client company, as well as its current auditor. You have a choice to profile a good client - to accept; or a bad client - to reject.
• Part I: What factors should you as auditor consider prior to accepting or rejecting an engagement? Explain.
• Part II: List the pre-acceptance procedures and pre-acceptance evaluation that you would perform in assessing the existing or prospective client. Provide an example of audit evidence for each step. These pre-acceptance procedures and pre-acceptance evaluation will point to the direction as to whether the client would be accepted or rejected.
• Part III: Based on your assessment and evaluation of your model public corporation, provide your recommendation to accept or reject the client. Identify, and describe at least two of your points in the recommendation to highlight the impact on your professional judgment.