LEVEL 3 SAICA Code of Professional Conduct and general auditing theory [21 marks] Sweetie Jacobs is the marketing manager at Pratt \& Whitney (P&W), a recently formed firm of registered auditors operating from offices in Rondebosch, Cape Town. She recently drafted a letter that she intends sending out to a large number of local businesses. The letter reads as follows: Pratt \& Whitney P.O. Box 420 Rondebosch 17 January 201 [Name and address of potential client] Dear Sir/Madam We are the new kids on the audit block, formed to serve the southern suburbs of Cape Town (for now - we eventually intend to conquer the world of auditing!). The purpose of this letter is to: - inform you of our range of top quality services; if you have dealt with the so-called Big 4 before, we promise you vastly better service than you received from those lumbering dinosaurs (in fact, we think they are on the verge of extinction); - invite you to make us your business partner; and - guarantee our speedy acceptance of appointment (within 24 hours, as outlined below), should you do the sensible thing and choose us as your auditors (and, hopefully, the provider of further services). All you have to do in order to appoint us as your business partner is to complete the short section towards the end of this letter: no mess, no fuss. But hurry, because we are only able to offer the terms and conditions outlined below for a very limited period. (Another reason not to delay, but to act today is that the first 20 respondents will receive fantastic braai tongs, equipped with a built-in LED light, so you always have a light handy to check the wors.) Some reasons to choose us: - As stated above, we are good. In fact, we are more than good: we are (to borrow a line from Tina Turner) simply the best! - We are qualified to perform audits of companies (large, small or anywhere in between) as required by the Companies Act 71 of 2008 . But here's the really good part: our auditing methodology is designed to minimise disruption to your business activities. How do we do this? It's very simple: being an up-to-date firm, we do controls testing only, which is much more efficient than the substantive testing methodology used by other firms. Our methodology also ensures the detection of fraud. And, should our testing procedures cause you any degree of inconvenience, we would be happy to modify them to better suit you: no arguments. We are the flexible firm, always willing to bend over backwards for you. - We pass the savings of our efficient controls testing methodology on to you, so we will quote you an audit fee at least 15% lower than what you paid for your last audit. - Our audit can be extended to include a range of other services, as listed below. It would be sensible for you also to engage us to provide all of these other services, as we reduce our audit fee by 5% for each additional service that you ask us to perform. Do the sums: if you tick all the 'Yes' boxes below, you can save a further 20% on our already low audit fees! And there is nothing untoward about this fantastic discount. We can offer it because, if, for example, our tax staff does your tax compliance work, the audit staff will know it's spot-on, and can then cut back on the related audit work. - If you have had a fall-out with your present auditor, partner with us instead. We promise to assist you, not fight with you. After all, you pay your auditor good money, and in return deserve the best service. And don't just take our word for this: have a look at what one our many satisfied clients has to say about us: I can't tell you how much I have enjoyed dealing with Pratt \& Whitney. Our previous auditors were expensive, and they found fault with just about everything we did. Pratt \& Whitney is so much nicer to deal with: they're much cheaper, and they hardly bother us at all. And, most importantly, they give us exactly what we want, a clean audit report! For you to complete Indicate which of the following service(s) you require in addition to an external audit (and remember: the more you tick, the more you save!): Your name: Your email address: We will email you a letter of client acceptance within 24 hours of receipt of the above, and that will serve as a binding contract between ourselves and your company. That's how easy we make it for you! We look forward to doing business with you, and knocking your socks off. Regards, Pratt \& Whitney REQUIRED Guided by the SAICA's Code of Professional Conduct and general auditing theory, comment critically on the draft letter