ACC541 ACC/541 Client Understanding Paper

As a newly hired Staff I audit person, you are responsible for analyzing the work papers for one of the clients of your firm.  Your client is not clear about why you are asking for information on the following topics:

Adjusting lower cost of market inventory on valuation

Capitalizing interest on building construction

Recording gain or loss on asset disposal (sale)

Adjusting goodwill for impairment

Write a 1,050- to 1,400-word response (memo format) that addresses your client’s questions.  Please keep in mind the client has already made the transactions related to the above issues, but you do not have their support/documentation.  You should assume the client has accounting knowledge on each issue.  It is not necessary to communicate to them as if they are in an accounting 101 course.  You should briefly explain the theory and some of the requirements of the topic/issue.  This information should come from citing the Accounting Standards Codification (ASC).  You can also supplement the ASC with other qualifying source information.  You do not need to detail your audit process, but you should provide enough information for the client to understand why need their information.  Tip: The auditor is coming in after the fact and their role is to verify information, which you requested in the first meeting with the client.  Some things you want to verify – did the client follow GAAP, did they meet requirements explained in the ASC, etc.?  Communicate with the client in a familiar professional tone.  They are not new to your firm.  Do not write that you are the new person.