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Centrum External Auditors, LLC are considering accepting a new client; StarLock Industries, Inc. StarLock Industries is a publicly-traded national distributor of beds and bedding
Centrum External Auditors, LLC are considering accepting a new client; StarLock Industries, Inc. StarLock Industries is a publicly-traded national distributor of beds and bedding products throughout the continental United States. As part of the client acceptance decision, Centrum's partners are discussing what happened to StarLock's previous auditor. The client's top management has advised that they terminated the previous auditor after disagreements and differences of opinion on 'key accounting measures. At this juncture, Centrum's most prudent and appropriate course of action would be O to advise top management of StarLock Industries that they will be unable to accept this audit engagement. Any client that has terminated a relationship with an auditor due to a disagreement is likely to represent increased inherent risk. Oto request top management's written position to contact the previous auditor and discuss the circumstances surrounding the disagreement with them. Once Centrum gains a better understanding of the situation, it will likely assist in the client acceptance/rejection decision. O to proceed with client acceptance. StarLock Industries operates in a fairly specialized industry, and it is most likely that the previous auditor's lack of understanding caused the disagreement on accounting measures. O to advise StarLock Industries' top management that per generally accepted auditing standards, all accounting measures requiring any degree of judgment are to be determined by the auditor, not management.
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