Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are a CPA in a regional public accounting firm that has ten offices in three states. Mr. Shine has approached you with a request

You are a CPA in a regional public accounting firm that has ten offices in three states. Mr. Shine has approached you with a request for an audit. He is the president of Hitech Software and Games Inc., a five-year-old company that has recently grown to $500 million in sales and $200 million in total assets. Shine is thinking about going public with a $25 million issue of common stock, of which $10 million would be a secondary issue of shares he holds. You are very happy about this opportunity because you know Shine is the new president of the Symphony Society board and has made quite a civic impression since he came to your medium-size city seven years ago. Hitech is one of the growing employers in the city. Referencing this weeks lecture, respond to the following:

Discuss the sources of information and the types of inquiries that you and the firms partners may make in connection with accepting Hitech as a new client.

Do professional audit standards require any investigation of prospective clients? Why or why not?

Suppose Shine also told you that ten years ago his closely-held hamburger franchise business went bankrupt. Upon investigation, you discover from former auditors (your own firm in another city) that Shine was fraudulent in its application of franchise-fee income recognition rules and presented such difficulties that your firm resigned from the audit (before the bankruptcy). Do you think the partner in charge of the audit practice should accept Hitech as a new client?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

3. Evaluate your listeners and tailor your speech to them

Answered: 1 week ago