Smith Manufacturing\'s bank has just informed the company\'s CFO that an audit i

Question

Smith Manufacturing's bank has just informed the company's CFO that an audit is required to obtain an operating line of credit (LOC). The company needs the LOC to maintain its cash flow. Mr. Jones has contacted you to see if your firm is willing to perform an audit. Prepare a memo to Mr. Jones that addresses any concerns you may have regarding the audit. Consider 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 provide a copy of what the opinion would look like. Prepare a sample draft of a standard unqualified audit opinion as an attachment to your memo. Make sure you include a clause that the opinion is a "Sample Only" and not to be used for any other purpose.

Explanation / Answer

A memo to Mr. Jones regarding the audit

To Mr. jones

smith manufacturnig's bank

you have requested that we aduit the LOC of smith manufacturing bank, which comprise the operating line of credit to maintain cash flow. we are please to confirm our acceptance and our understanding of this audit engagement by means of this letter. our audit will be cconducted with the objective of our expressing an opinion on the LOC

Draft of a standard unqualified audit opinion attached to our memo

In Auditors(our) opinion and to the best of our information and according to the expanation given to us, the operating line of credit (LOC) give the information required by the the act in the manner so required and give true and fair view, this opinion is a "sample only" and not to be used for any other purpose

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