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Case 5-20 Paper

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[Case 5-20]
A. Based on the information, evaluate the company for acceptance. List criteria that must be reviewed in order to determine acceptability.
The company will be accepted if the auditor has determined that the client is acceptable from a risk and ethics perspective, and has concluded that the ethical requirements regarding the specific client engagement can be met.

In this case, the client would probably be accepted based on the information given. However, the industry of the business of the client might be a little high risk; i.e. they sell a wide range of products and in geographically dispersed markets. The customers also vary somewhat. We are not able to determine from the information whether the auditor’s possess the skills …show more content…
Step 2: Determine whether the auditor is able to meet the ethical requirements regarding the client.
Auditor should check if the firm meets the relevant ethical requirements. The most important requirement is independence. For example, if there is any pending litigation between client and auditor, the independence of the auditor could be affected. Or, when fees are unpaid for a long time, objectivity could also be affected.

In this step, the auditor should also determine if the necessary expertise/certain non-audit skills/specific GAAP issues, with regards to the client’s case, are available to the audit team. (Firm checks competencies and resources to undertake a new engagement)

Step 3: Determine need for other professionals. Auditor may need the help of another auditor who will audit a portion of the client’s financial statements. This can also be an outside specialist (I.e. Tax specialist or IT specialist) Auditor should check if the component auditor is sufficiently

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