You have been asked to conduct an audit for a company that produces fine wines. You and your accounting firm have never audited a wine company. You are a small accounting firm with two CPAs (audit managers) and four newly graduated accounting majors. This audit would really be a big money maker for your CPA firm. The wine company is controlled by a single family who make all the decisions and oversee all financial matters. The only reason they wish for an audit is that it is being required of a bank from whom the wine company's owners seek a large loan to expand the wine business.

Address the considerations/issues involved with taking on this client

Issue 1: What risks are involved? How would you overcome or mitigate these risks? Due diligence?

Issue 2: What kind of research would you conduct to determine if you should take on this client?

Issue 3: Do you have the personnel and expertise needed to take on this audit? If not, what can you do to "fix" this issue?

Issue 4: What concerns do you have regarding the closely held wine company? What suggestions might you have for the owners?

NOW, let's suppose you want to do the audit and believe that you can professionally take them on as a client ......

Develop an audit plan that addresses personnel needed, special outside experts needed, what you need from the company (documents, interviews with owners, etc.,)

In your answer, address the areas listed above.