Question

Case 5-20 Audit - Client Acceptance Phase

Description of the business: Compu Group Corporation designs, develops, manufactures, and markets a wide range of personal computing products, including desktop personal computers, portable computers, network servers, and peripheral products that store and manage data in network environments. The company markets its products primarily to business, home, government, and education customers. the company operates in one principal industry segment across geographically diverse markets. The company is subject to legal proceeding and claims which arise in the ordinary course of its business. Management does not believe that the outcome of any of those matters will have a material adverse effect on the company's consolidated financial position or operating results.

Based on the information presented, would the auditor accept this company as a client? List the criteria and outline your audit approach determining the acceptance of this client.

Answer 1

According to the passage the Compu group corporation has a wide range of business in computer and in this digital era there is always demand of computing services. Compu group corporation provodes all type of computer devices, peripheral products etc. As it fullfills all the necessities in different fields primarily to business, home, government, and education customers so the auditor should accept this company as a client.

Basically the company is fully confident about it's services as it provides proper services so that it's products have a positive selling in all type of sectors.

Therefore management also very confident about the services provide by the company and also management knows how this company faces the adverse condition and maintains it's business the company may operates in one principal industry segment across geographically diverse markets but the management does not believe that the outcome of any of those matters will have a material adverse effect on the company's consolidated financial position or operating results.As a consequence the auditor should accept this company as a client.