Please it is argent;

Type of Assurance Engagement Users Needs

Joan Brock is a Lending Specialist for a local bank. Her customer, Sue Smith is an owner of a local manufacturing facility in the same city. Sue has an opportunity to purchase her main suppliers facility. Sue believes that this is an excellent opportunity but would require that her line of credit be increased from $300 000 to $1,000,000 to finance the acquisition. Sue Smith is one of Joans best customers and have always made her loan payments in a timely manner during her ten-year history.

Currently, Joan is requiring Sue to provide her annual financial statements of the company and have a review report completed by an auditing firm. To approve the request loan increase, the banks head office will require Sue to provide audited financial statements.

Hint: research CSRE 2400 for review engagement requirements

Required:

a) (10 marks) Distinguish between a review report and an audit report. Why do you think the bank would require an audit instead of a review in this case?

b) (5 marks) Do you think the banks policy is reasonable?

Thank you!