Lakeside Case 2
February 7, 2013
Abernathy and Chapman
Wallace Andrews Lakeside
1235 Sentry Drive
Richmond, Virginia 66266
Dear Mr. Wallace,
We have researched the issues that were discussed regarding the possibility of Lakeside Company going public and the ramifications this action would have on their desirability as a client. We have also analyzed Lakeside Company’s financial statements to evaluate the possibility of misstatements. Attached, you will find our report discussing these issues.
Please contact us with any further questions.
Sincerely,
Mariana Welch
Cc: Bob Zimmerman
Case Two: New Clients, Legal Liability and Materiality
Table of Contents Executive Summary 4 Discussion Questions 5 Apply Your Research 9 Consulting Partner Review 13 Question 1 13 Question 2 14 The Impact of Sarbanes-Oxley 15 Bibliography 17
Executive Summary
Abernethy and Chapman have to consider whether to accept new client. To do this they created a three-partner committee to screen these new clients. A partner in charge is assigned to each of the potential clients and is driven by guidelines set out by this three-partner committee.
An analysis of potential legal liability must be performed for each of these potential clients. The partner in charge that is assigned to assess these clients is asked specific questions that were designed by the committee. A couple of the questions that are asked are: Is the potential client privately held or publicly held? Evaluate the possible legal liability to third parties, both present and potential, that Abernethy and Chapman might incur if the engagement is accepted.
Another form that the partner in charge must complete is regarding information from predecessor auditors. All of this information is necessary in determining whether to take on this potential client. This form provides information about what a predecessor auditor’s evaluations where as well as seeing what the predecessor auditor’s
Abernathy and Chapman
Wallace Andrews Lakeside
1235 Sentry Drive
Richmond, Virginia 66266
Dear Mr. Wallace,
We have researched the issues that were discussed regarding the possibility of Lakeside Company going public and the ramifications this action would have on their desirability as a client. We have also analyzed Lakeside Company’s financial statements to evaluate the possibility of misstatements. Attached, you will find our report discussing these issues.
Please contact us with any further questions.
Sincerely,
Mariana Welch
Cc: Bob Zimmerman
Case Two: New Clients, Legal Liability and Materiality
Table of Contents Executive Summary 4 Discussion Questions 5 Apply Your Research 9 Consulting Partner Review 13 Question 1 13 Question 2 14 The Impact of Sarbanes-Oxley 15 Bibliography 17
Executive Summary
Abernethy and Chapman have to consider whether to accept new client. To do this they created a three-partner committee to screen these new clients. A partner in charge is assigned to each of the potential clients and is driven by guidelines set out by this three-partner committee.
An analysis of potential legal liability must be performed for each of these potential clients. The partner in charge that is assigned to assess these clients is asked specific questions that were designed by the committee. A couple of the questions that are asked are: Is the potential client privately held or publicly held? Evaluate the possible legal liability to third parties, both present and potential, that Abernethy and Chapman might incur if the engagement is accepted.
Another form that the partner in charge must complete is regarding information from predecessor auditors. All of this information is necessary in determining whether to take on this potential client. This form provides information about what a predecessor auditor’s evaluations where as well as seeing what the predecessor auditor’s
Bibliography: AICPA. (2006, December 15). Audit Documentation. Retrieved February 5, 2013, from AICPA: http://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AU-00339.pdf AICPA AICPA. (2013, January 1). Standards for Performing and Reporting on Peer Reviews. Retrieved February 6, 2013, from AICPA: http://www.aicpa.org/Research/Standards/PeerReview/DownloadableDocuments/PeerReviewStandards.pdf Arens, A PCAOB. (n.d.). AU Section 315. Retrieved February 4, 2013, from PCAOB: http://pcaobus.org/standards/auditing/pages/au315.aspx VSCPA Arens, A.A., Elder, R.J., & Beasley, M.S. (2012). Auditing and Assurance Services an Integrated Approach (14th ed.). Essex, England: Person Education Limited.