A city has approached you concerning the audit of its 2015 financial statements. State law requires the city to have an audit and submit the audited financial report to the state. New elections at the beginning of the fiscal year resulted in a change in the administration of the city. Your firm and the audit firm that conducted the prior years audit have been asked by the city to submit bids for the current years audit. Since the new city administration is quite inexperienced, it has not provided you with a formal Request for Proposal (RFP). Therefore, you have the prior years audit and financial reports, and little more information than the following for fiscal year 2015.

The new city controller is a certified public accountant who worked for a firm that specialized in government audits.

The last three years the city has received a clean audit opinion.

The city is receiving grants and other aid from state and federal sources totaling $3,977,000.

The budgeted revenues for the year were $20,980,000 and expenditures were $25,749,000. Approximately 48% of revenues are from property taxes.

The city has six governmental funds, three enterprise funds, and an agency fund.

It is five months until the end of fiscal year 2015.

Prior to determining whether you would be interested in submitting a bid for the audit, you decide to use the information you have to draw up a list of factors that would affect the cost of your bid. Provide your list and explain why each item would affect your fee bid. Paper Requirements:

Submit your responses to the requirements found above in a 1-2 page document in MS Word. Label each question clearly. For computations, please include them in a table.