Potential Areas of Risk at Capitol Equipment Company

MEMORANDUM To:A. G. Ressive, Partner at Zurawski & Rolfe Date: May 5, 2007 Re:potence argonas of assay at Capitol Equipment Company (CEC) Upon the acceptance of CEC as a client, we began investigation procedures to determine potential risks and the roles they would play in the invention of the engagement. The investigation is completed and the results and recommendations are listed below. Our contact with CECs predecessor auditors, Nit Pickers, LLP (NP), has resulted in positive remarks about the caller-out. CEC has always received standard unconditioned opinions from NP and NP confides CEC has an excellent reputation. However, upon further inquiries, in that location are some areas of concern which may change the amount of lap we assign for the engagement as the acceptable audit risk has been set at 5% and the potential for future festering and success with the keep company is high. High AAR CEC is a public company that is expected to grow significantly in the future. As the company grows in size, more assets or revenues will be stirred and more financial statements will be highly relied on by external users. Therefore, more appropriate that the AAR should be decreased, I recommend decreasing CECs AAR to 3%.

Communications with the Previous Auditor NP is a public accounting firm with a actually good reputation in the industry, so we initially conclude that managers integrity should not affect the AAR. However, we noticed that there is a discrepancy in the comments gave on the reasons for the disengagement amid NP and CEC. The CEO of CEC claimed that the change was made because he believe that NP has been slow to respond to his questions and requests, and wants a more responsive auditing firm. We encourage the firm to further inquire with the mangers of CEC and NP to body forth that there is no other underlying factors that caused the termination of their engagement. encipher of Ethics Mr. Guano, the Chairman and CEO of CEC, mentioned that senior management has not... If you want to snuff it a full essay, order it on our website: Orderessay

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