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You are being asked to complete part of the checklist for the knowledge of a client’s business, as you would do for any new client of your audit firm

Accounting

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You are being asked to complete part of the checklist for the knowledge of a client’s business, as you would do for any new client of your audit firm.  It is expected that you will study at least two competitors.

The case is Western Energy Recovery, a fictional company.  Case notes and the Excel spreadsheet containing the financials is posted on BlackBoard.

Required

1. (10 marks) Fill out the client acceptance checklist.  This will require you to do research on the client’s industry.  You may wish to contact the library if you need help with research.  Feel free to expand the Knowledge of Industry section to have enough room to give the results of your research.

Significant weight is assigned to the Economic Analysis and Knowledge of Industry sections.

2. (8 marks) Perform a preliminary analysis of the financial information, meaning booth vertical and horizontal analysis.
3. (6 marks) Write a few sentences expanding on the needs of the key users of these financial statements.
4. (2 marks) What type of engagement would you recommend?
5. (4 marks) Calculate materiality based on the information you’ve been given and justify your calculation.
6. (8 marks) Identify four areas of inherent risk that might affect your audit planning. Would you say these are high risks or low?
7. (2 marks) Would you recommend RMK accept this assignment?