Background Information

You are an audit senior with the firm Marshall Hobbes Partners. The firm has been approached by the directors of Grays Beans Pty Ltd to conduct an audit of the financial statements for the year ended 30 June 20X2 and provide a report.

Grayss is Australian based wholesaler of coffee beans, which was set up by cousins Emma and James three years ago. Both Emma and James are directors and each own 50% of the shares in the company.

On researching the company, you find plenty of positive reviews for Grays coffee beans and several local news articles from the opening of the business. You also find a news piece from five years ago, featuring James discussing cryptocurrency as the future of all business dealings and encouraging others to buy up big like he has.

In your initial meeting, Emma mentions that they left their previous auditors due to differences in opinion about accounting policies and treatments of various transactions, but provides you their contact details to get in touch. She also mentions that she heard about the great work the firm does through her brother-in-law, Matt, who is one of the audit partners at Marshall Hobbes. When you ask Matt about their relationship, he says they arent close, but he will still remove himself from any potential involvement with the audit should the firm accept the client. Matt is generally considered to be the go-to person for clients in wholesale businesses, as no one else in the firm has experience in this area.

The finance manager of Grays is Lauren Jensen. James assures you that Lauren is very competent in her position, stating that she does everything accounts payable, receivable, payments, bank recs, reporting, you name it!. James says they have offered to employ an assistant for her to take on some of the leg work, but that Lauren has maintained that is easier for her to just do it herself.

Required:

Provide a report to the audit partner explaining your recommendation as to whether your firm should accept Grays Beans Pty Ltd as a client. As part of your recommendation, you should include the following:

1. The type and level of assurance engagement that has been requested by Grays and what this requires the auditor to provide;
2. The factors from the background information that you have considered in your recommendation;
3. Explanation of the impact of the ethical framework on your recommendation. You should refer to the fundamental principles and specific threats;
4. Explanation of the impact of relevant standards and regulations on your recommendation. You should refer to specific legislation and audit standards;
5. Consideration of your potential legal liability as an auditor;

The report should be presented as a business report, including a short introduction and conclusion stating your recommendation. Whilst referencing is not necessarily standard practice in a business report, please employ academic referencing in your report. See attached for rubric detailing marking criteria.

1000 words.