As discussed in class, a significant portion of the auditor's work involves documentation. The ability to document thought processes, testing procedures and conclusions clearly and concisely is required to meet the documentation standards of GAAS and the PCAOB.
Also, as discussed in early Chapters in our textbook, the process of courting and ultimately obtaining a new client can be difficult, require a number of steps, and ultimately is subject to a new client "acceptance" process/decision.
This assignment is designed to have you explore various data sources to gather information on a prospect client and then (1) develop a marketing plan to approach the prospect,
(2) evaluate the prospect's business risk and elements of the risks of material misstatement based on the information available, and (3) positive and negative considerations you identify in preparing a preliminary assessment to "accept" the prospect as a new client. The limitations to this assignment are that you cannot interview anyone at the prospect company or its registered independent public accounting firm. As a result, a portion of this assignment may result in you developing a series of questions for which answers are not readily available.
Topic - Assignment:
Assume that you have joined the audit staff at Haskell & White and the partners seek your assistance to gather information and pursue an auditor-client relationship with Orange County-based BIOLASE, Inc., a public company that trades on NASDAQ CM under the symbol BIOL. Their website is www.biolase.com.
{NOTE - I picked this company based on it's relative size and digestibility for our class as well as publicity in the current marketplace and my assumption that no one in class is currently interning for BIOLASE's current auditor. If you have a conflict with this assignment due to relationships with BIOLASE or its auditor, please let me know and I will assign you an alternative company to research. Remember - Integrity and Ethics are important to our profession.}
Use available information from the public domain (internet, news sources, presentations, etc.) to gather information on BIOLASE. At a minimum, you should review BIOLASE's corporate website and public filings available on the EDGAR database at www.sec.gov.
From the information you gather, write a file memorandum addressing the following three components:
1.Steps or actions that you would consider appropriate in order to get Haskell & White in front of the BIOLASE decision-makers in order to present a proposal and win the engagement. Assume there are currently no direct relationships. In other words, how would you suggest that you/the Firm begin to develop necessary relationships to ultimately be in a position to present a proposal for services to this company? Please think way beyond a 'cold call' to the company as this should be considered a relatively long-term marketing action plan.
2.Identifiable Business Risks for BIOLASE and related Risks of Material Misstatement (including observable Inherent Risks and identifiable Control Risks). In this section, you should also include discussion points/concerns that you identify that would require follow-up with BIOLASE's personnel during an interview of BIOLASE.
3.Based on the information gathered and discussed in #2 above, discuss positive attributes and negative concerns about BIOLASE and/or concerns for the Firm that you identify that would have a bearing on the Firm's decision to accept BIOLASE as a client of the Firm assuming that we were to present and BIOLASE were to ultimately accept a proposal.
Guidance:
Papers should be approximately 4 to 6 pages in length, typed, double-spaced (assuming a 12-pitch font). Please do not find yourself writing more than 6 pages of narrative.
While there may be many details and "sub-topics" you wish to discuss in your presentation, a better approach will be to focus on a couple of key topics with well-developed supporting arguments. However, your ideas need to be clearly identified and supported throughout your presentation. As the ideas are also an expression of your opinion, you cannot be "wrong" - unless you fail to support your thoughts.
You may find useful information from future class discussions, and certainly there is a multitude of external sources and or later chapters of the text (some information for which I encourage you to read ahead).
Grading:
This assignment represents 100 of the possible 500 grade points for this class (20%) and therefore should be given appropriate attention.
As noted in the syllabus, your paper will be graded for coherence, conciseness, clarity and use of Standard English. Of course, your paper should adequately address the topic assigned. A formal bibliography is not required. However, if you quote a source directly (such as a public filing, news article, textbook, information from websites or other sources), your source should be footnoted. Your work should also be original - not plagiarized from news articles or copied from classmates.