1. Identify four to six procedures auditors may perform as part of the client acceptance process. Are any of the procedures identified by you required by generally accepted auditing standards?
1. Review available financial statements, minutes of board of directors’ meetings prior, tax returns and other documents pertinent to the client’s operations.
2. Perform preliminary analytical review procedures to identify areas of high risk and to understand the nature of the client’s financial statements.
3. Determine whether the firm is independent with respect to the client. (required)
4. Communicate with the predecessor auditor. (required)
5. Tour the client facilities to learn of the nature and scope of operations.
6. Evaluate the need for and availability of specialists. (required)

2. Identify and discuss financial and non-financial factors that are relevant to the decision to accept the potential client.
Financial Factors: 1. Retained earnings balance shows that the company has been profitable lately.
2. The company’s sales show a positive trend
3. Current ratio, Account receivables and inventory turnover show an acceptable level
4. Accounts payable have increased by more than 35% comparing to last year from 3,683 to 4,988 in the same time the long term debt has increased slightly.
5. Strong increase in the company’s assets over the last three year by 15%
6. The company has invested a substantial amount of money last year mainly from the retaining earnings cumulated to increase its productive capacities Non-financial Factors: a. The company is considering an initial public offering in the near future.
b. The wine industry is a highly fragmented industry that is dominated by a small number of large companies such as Ernest & Julio Gallo and Constellation Brands.
c. Wine distribution is primarily achieved through supermarket chains and mass