21 May Audit Engagement
Smith Manufacturing’s bank has just informed the company’s CFO that an audit is required to obtain an operating line of credit (LOC). The company needs the LOC to maintain its cash flow. Mr. Jones has contacted you to see if your firm is willing to perform an audit. Prepare a memo to Mr. Jones that addresses any concerns you may have regarding the audit. Consider whether your firm can complete the audit, or whether it is a conflict of interest.
In addition, Mr. Jones is unfamiliar with the standard unqualified audit opinion report. He has asked that you provide a copy of what the opinion would look like. Prepare a sample draft of a standard unqualified audit opinion as an attachment to your memo. Make sure you include a clause that the opinion is a “Sample Only” and not to be used for any other purpose.
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