you will assume the role of lead auditor at an external auditing firm, Willis & Adams. The firm is reevaluating its client list and audit procedures. You will be responsible for supporting the continued engagement of a current client, EarthWear Clothiers, and planning the audit of this organizations financial statements. You will evaluate and recommend improvements to internal controls, and communicate the audit opinions to the senior management of the organization. 2 Specifically, the following critical elements must be addressed:

I. Client Engagement: The external auditing team has been approached by a client to do their yearly audit. You are responsible for evaluating the factors associated with the organization and the external auditing team to determine why it would be appropriate to move forward with the client request.

A. Evaluate the corporate structure and annual report of the organization, and summarize your findings.

B. Evaluate the following information related to the external auditing firm, and summarize your findings:

1. Independence

2. Knowledge of client industry

3. Staffing capabilities

C. Assume your firm has decided to move forward. Referring to your evaluation of internal and external factors, explain why it would be appropriate for the external auditing team to accept the client audit request, using examples to support your response.