Question

Williams 400 Company, a publicly traded company, recently issued an RFP for quarterly reviews and the annual audit. The company is generally perceived to be a desirable client and is expected to be extremely profitable for whichever firm lands the engagement. Shapiro, LLP, a public accounting firm, wishes to propose for the Williams 400 Co. engagement.

Required:

(a) What potential sources can Shapiro, LLP, utilize to gather information about the Williams 400 Company?

(b) After researching the company, what should Shapiro, LLP, consider concerning the staffing needs of the audit?

(c) If Shapiro, LLP, determines that Williams 400 Company falls within a suitable level of risk, and expected engagement profitability, and that the firm has sufficient staff to perform the engagement, what are the next steps in the client proposal-acceptance process?

Answer 1

(a) What potential sources can Shapiro, LLP, utilize to gather information about the Williams 400 Company?

• SEC Fillings
• News reports
• Press releases
• Interviews with management personals
• Prior auditors

(b) After researching the company, what should Shapiro, LLP, consider concerning the staffing needs of the audit?

They need to determine the staff hours required, type of staff as to the knowledge and experience, at what steps how many members would be required and the budget constraints of their remuneration vis a vis the audit fees

c) If Shapiro, LLP, determines that Williams 400 Company falls within a suitable level of risk, and expected engagement profitability, and that the firm has sufficient staff to perform the engagement, what are the next steps in the client proposal-acceptance process?

The next steps would require sending a proposal as per the RFP and if accepted by Williams 400 then audit engagement letter duly signed by auditor as well as the auditee.