Steps to Completion

1. Conduct Internet and library research

Do an Internet and or library search to determine the current state of the U.S. economy and the

household appliance industry. This will be the bases for your summary of possible client audit

and fraud risks that will be included in your report below. You need at least three sources of

information for the U.S. economy and industry analysis; be sure to cite your sources in your

report. You can use the most recent years for your internet search of the U.S. economy and

industry. Do not go back to the years stated in the annual report for the project.

In other words, the Marco financial statements are dated 2014 and 2015.

You should conduct

your internet research on the two years preceding the year you are taking this course and

assume the Marco statements are also from the same two years.

For example, if you are taking

this course in the year 202X you would conduct your research on 202X – 2 years and 202X – 1

year and also assume the Marco financial statements are dated 202X – 2 years and 202X – 1

year, whereby X could equal any digit between 0 and 9.

Specifically

, if this year were 2029, you

would conduct research on 2028 and 2027.

2. Prepare a client acceptance report

Prepare a client acceptance report to the partner in charge of your engagement. Use your own

words to prepare a report to the partner. There is no standard way to write a report, and there is

no template for a client acceptance report. Internal reports such as a client acceptance report

are proprietary and confidential. Information and data that would be included in a client

acceptance report will vary depending on the audit firm and the client involved. Your report will

need to contain lists of additional information the audit firm would need to gather before the

client acceptance decision is finalized.

Create a letterhead for the accounting firm where you work: Levin, Lombard, & Wolod, LLC and

use the letterhead to write your client acceptance report. Address the report to the partner in

charge of the audit (your professor). This is not a standard audit report; you may format it as a

memo to your supervisor that contains the required information and sections discussed below.

Page 97 of your Auditing textbook discusses the client acceptance process. The client

acceptance report is important because it aids in the process of evaluating whether or not to

accept a client. The report would probably be written by an audit manager and addressed to the

partner in charge of the audit, assuming the client was accepted for the audit. There are a

number of points on pages 97 through 100 that you should consider for inclusion in your client

acceptance report.

Your client acceptance report should contain the following sections:

A summary of possible client audit and fraud risks that you develop from your review of the

publicly available information on the U.S. economy and the firm’s unaudited 2015 financial

statements as well as the limited industrial data provided in the project. As a reminder, you may

use the most recent two years preceding the year you are taking this course. You must use at

least three sources of information. Cite: a) sources for the economy and industry analysis, and

b) sources in your client acceptance report.

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A description of items you recommend the audit firm research concerning Marco’s managers

that would address their ethical character and qualifications to run a firm like Marco along with a

list of possible information sources. Include a brief discussion of why you included each item by

discussing how it would affect audit and fraud risk. Include three sources of information where

you would expect to find this information. A source of information is somewhere you would look

to develop this information and can be internal information within the firm, public source, or

discussions with parties that might be familiar with Marco’s management. Cite your sources.

Provide a description of items you recommend the audit firm research concerning Marco’s

relationships with third parties including:



customers,



vendors,



financial institutions, and



legal counsel that would be relevant to assess audit risk.

Include possible sources of information for each third party and where you would expect to find

the information. Further, include a brief discussion of why you included each item by discussing

how it would affect audit and fraud risk. You must cite at least three sources of information.

A description of items you recommend the audit firm review internally to determine the need for

outside experts on the audit and whether the audit firm is sufficiently independent of Marco.

Provide a general discussion of the sources you would use here.

The grading for the report has a style com