Client Acceptance and Planning
Thomas Jefferson, an audit partner with your firm, has selected you to prepare a memo regarding the acceptance of ABC as an audit client. The audit will, if accepted, occur during the firm's slow season when there is excess employee capacity.
Consider the following:
1. The predecessor auditor explained that due to disagreements on the application of GAAP ABC, Inc. chose to engage another auditing firm. The auditor, fearing litigation, would not specify the specific areas of disagreement.
2. ABC regularly pays its accounts payable 30-60 days late.
3. Management turnover has been excessive.
4. ABC is in a highly regulated, competitive industry.
5. Accounts Receivable turnover is 43 days.
REQUIRED:
Given the above information what procedures would you undertake regarding items 1-5