Question

• Assume that you are a partner of Apples and Oranges, CPAs. During the last year, you were part of the team that audited Parker and Smith, Inc., a small publicly held company. The audit went quite well, and the client had high praise for the work done by you and the other members of the audit team. One day six months after the completion of the audit, you receive this email from Jerome Parker, a president of Parker and Smith:

Hi [your name],

We are still talking around here about the good job you and the other members of the audit team did on our audit. You all seemed to have a thorough understanding of our business, and we found working with you a pleasure. Based on the good experience we had with the audit, we would like to engage your firm to do additional work for us. Specifically, we’d like your help in designing a new financial information system for our company. We’re also considering investing in stock being offered by one of our suppliers, and we’d like your input into that decision. Hope you can help us here! Looking forward to hearing from you. Regards, Jerome.

Write a letter to Mr. Parker in response to his email. Remember that you want to maintain a good working relationship with Parker and Smith. You also want to maintain proper professional and ethical standards.

Answer 1

PRIVATE AND CONFIDENTIAL

Apple & Orange CPAs

13 May 2020

Kind Attention: Mr. Ashish Sinha

Dear Parker and Smith Inc.

It is glad to know that the work done by Apple & Orange CPAs are given a chance to work for the new project. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Opinion of Apple & Orange is formed after conducting extensive audit procedures.

During the previous engagement, most of the financial activities of the organization have been observed so that we understand the nature and activities of Parker and Smith Inc. better. Thanks for keeping believe in us that we can do the additional work in your organization. we can help with designing a new financial information system for your company. and will like to accept the new proposal.

Terms of Business

• Invoice – Invoice would be raised at the end of each month;
• Payment for services – Agrees to settle the full amount of the invoice raised less applicable TDS within 45 days of receipt of an invoice;
• Any disputes would be subject to Bangalore Jurisdiction.

Engagement Period

This engagement letter is valid until September 30, 2020.

Thank you for the opportunity. Apple & Orange is happy to provide any further suggestion and service. Looking forward to hearing the scope of work

Yours faithfully,

For Apple & Orange Inc.

Pranav S S

Partner