You, CPA, are looking forward to mentoring your friend who has just started the educational process. It has been a while since your friend took an auditing course and he has asked your input on a case he has just completed. The case involved a small private company where the owner is the only shareholder (and thus any company income is distributed to the owner to help with her cost of living). As an established business, the owner decided that she would like to engage a public accountant to issue a written communication based on her company’s financial statements. As such, the owner asked her professional accountant about the various written communications that can be issued for the financial statements of her company. The private company currently holds no debt (but does intend to apply for a loan in the next two years in order to expand the business). Your friend asks you how you would respond to this case as the comments he received from the marker was that his discussion was too vague and that his analysis was not specific to the case.

Make an example response to help your friend understand how provide a specific and detailed analysis that incorporates case facts.