Q:

Smith Manufacturing's bank has just informed the company's CFO that an audit is required to get an operating line of credit (LOC). The company requires the LOC to maintain its cash flow. Mr. Jones has contacted you to see if your firm is willing to perform an audit. Purpose a memo to Mr. Jones that addresses any concerns you can have regarding the audit. Suppose whether your firm can complete the audit, or whether it is a conflict of interest.

In addition, Mr. Jones is unfamiliar with the standard unqualified audit opinion report. He has asked that you give a copy of what the opinion would look like. Purpose a sample draft of a standard unqualified audit opinion as an attachment to your memo. Make sure you add a clause that the opinion is a "Sample Only" and not to be used for any other purpose.