Audit Engagement

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.