Question

(Auditing Principles & Procedures)

Rana and Nada, a regional accounting firm is determining whether it wants to accept a new client, Salah Photos. Salah Photos is currently a privately held photography studio operating 24 studios in several states, but the company's management is planning an Initial Public Offering in the near future. This is the company's first audit. What steps should Rana and Nada take in evaluating this new client?

pls don't copy other answers.Thank you

Answer 1

The following steps should be followed by Rana and Nada in evaluating the new client:

- To ensure that the auditor's are completely independent from the company.

- Assess the turnover, size and operations of the photography studio.

- Use experience acquired in previously conducted audits to identify the areas in which a company might have made potential financial misstatement.

- Go through the companies memorandum and articles of association.

- Analyze the terms and conditions of the initial public offering.

- Check necessary compliance with local laws and regulations regarding the IPO.