Nikolai, Inc., a closely held company, wished to engage Francis, CPA, to examine its annual financial statements. Nikolai was generally pleased with the services provided by its prior CPA, Jo, but thought the audit work performed was too detailed and interfered excessively with Nikolai's normal office routines. Francis asked Nikolai to inform Jo of the decision to change auditors but Nikolai did not wish to do so.
Questions.
a. List and discuss the steps Francis should follow before accepting the engagement.
b. What additional procedures should Francis perform on this first-time engagement over and beyond those Francis would perform on the Nikolai engagement of the following year?