The WRI Audit Committee Has a Policy of Changing Audit

question 15

Essay

The WRI Audit Committee has a policy of changing audit firms every five years to ensure that they receive fresh approaches from different audit firms. Accordingly, the WRI Board has asked Morgan Faustini, & Feaster to replace its previous audit firm.
WRI is a manufacturer and distributor of wire ropes, industrial cables, and rigging cables and has a reputation for its ability to fill special orders and to ship across Canada from its Thunder Bay facility on time and at competitive prices. They have a reputation among their customers for going the extra mile and have kept a loyal customer base for over a century.
Jack Bonami, a new partner at Morgan, Faustini & Feaster, a growing CA firm in northern Ontario, is excited about WRI becoming a potential new client. The previous week he met with the Canadian President of WRI, Bob Rooper.
Jack Bonami quickly decided that Bob Rooper was a man of integrity and his frank and open opinions would make it a pleasure to deal with him. He also appeared to have a competent management team in place.
Jack also wanted to make an impression on his new firm by bringing in several new clients in the next year or two, as a good portion of his future compensation will be derived from new business.
He is also aware that any negligence on his part during the client acceptance phase would reflect on his professional judgment and open the firm to possible litigation.
The senior partner, Bob Morgan, has invited Jack Bonami to join him in his office to discuss WRI.
Required:
a) You are Bob Morgan, the Senior Partner at Morgan, Faustini & Feaster. What would be on your "checklist" of client acceptance questions? Prepare an exhaustive inventory of all the questions you would ask Jack before deciding to accept or reject WRI.
b) The firm recently lost a lawsuit and has parted ways with the partner-in-charge of the aggrieved client. What can Bob Morgan do to avoid litigation?

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Definitions:

Precipitation

Any form of water, liquid or solid, that falls from the atmosphere and reaches the ground, including rain, snow, sleet, and hail.

Malaria

A life-threatening disease transmitted through the bite of an infected Anopheles mosquito, characterized by fever, chills, and flu-like illness.

Nonrandom

Describes a process or selection method that is not determined by chance but possibly by human choice, algorithm, or natural law.

Simple Random Variable

A variable that assigns a numerical value to each possible outcome of a random phenomenon in a simple and straightforward manner.