Audit Acceptance Report Sample

Audit Firm Name

Certified Public Accountants

Street Address

City

To:

From:

Date:

Subject: Client Acceptance Report

This memo is in regards to ABC Inc. It contains a list of additional information that I think is vital in our engagement as the auditors of ABC Inc. I have listed the additional information below but in no particular order. Please feel free to add any information that you think I might have missed.

Our independence: I want to confirm that we are independent in fact and also in appearance with no conflict of interests with ABC Inc. in anyway including but not limited to financial and family ties.

Ethical requirement: As a firm, we also need to make sure that we can meet the ethical requirement that is needed to effectively audit ABC Inc..

ABC Management Background: We also need to confirm the background and records of ABC Inc. management and whether they are honest and have not been involved in illegal acts.

ABC Inc. Accounting System and Internal Control: We need to get an understanding of the system used, how effective it is and test it on the same.

Credit Information: We need to obtain credit information of ABC Inc. from the bank and other lenders. We will also need the same information for its officers.

Explanation on change of Auditor: We have already inquired on this and ABC is changing auditors since they had had the same auditor for the last five years and need a new perspective on their financials.

Inquiries from Previous Auditor: We need to get in contact with the previous auditor and discuss matters such as disagreements, integrity of the management, uncollected fees or any other challenged they faced from their previous work.

Review of Previous Audit Work: We need to review the previous audit work done on ABC Inc. to help us in planning for our own.

Inquiries from Management and Board on Officer Integrity and Criminal Records: The management and the corporate board of ABC Inc. have a lot of experience and close relation with each other since it is a relatively small company. They will be helpful in providing on each other.

Inventory Count: We need to consider if we have enough staff to carry out the inventory count and whether they are qualified to do so.

Industry Knowledge and Expertise: We need to consider whether we have the knowledge and expertise to audit in household appliance.

Business Activities: We need to get an understanding of the business activities of ABC Inc. and know what resources we will need in our audit work.

Other services: We need to know if there is any other service that we need to add in addition of the audit work.

Fee consideration: We need to know the audit fee, whether we need to negotiate or will it be constant fee as that of the previous auditor.

Limitations on the Scope of the Audit work: we need to clearly state the scope of our audit work and know if there is any limitations on the same.

References

Chi, W., Myers, L. A., Omer, T. C., & Xie, H. (2017). The effects of audit partner pre-client and client-specific experience on audit quality and on perceptions of audit quality. Review of Accounting Studies, 22(1), 361-391.

Pacheco-Paredes, A. A., Rama, D. V., & Wheatley, C. M. (2017). The Timing of Auditor Hiring: Determinants and Consequences. Accounting Horizons, 31(3), 85-103.

Paino, H., & Jabar, F. A. (2017). Auditor-Client Relationship: Perceived Expectation and Issues. Advanced Science Letters, 23(4), 2915-2917.