The New Audit Client Acceptance Decision 1

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1.0 Introduction
This assessment required students to take the role of an audit manager that is currently employed with Deep Breath LCC, a medium sized national accounting firm. This particular firm offers auditing services as well as tax services. The main purpose of my role as the audit manager is to decide and justify reasons on a new audit client acceptance. The process of accepting a new client is not a simple procedure especially during this phase where the public accounting environment is changing drastically. Intense competitive pressures among audit firms in selecting the best clients and increased exposures of litigation have driven auditors to be more prudent in the process of making decisions when accepting a new audit
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Under the Budget Approval internal control, annual planning and budgeting exercises are dealt seriously and comprehensively to ensure sufficiency of decision making by the operational managers. The Operating Procedures and Guidelines of PETRONAS relating to the internal control are documented in standard operating manuals and established guidelines to make sure the process is always conducted smoothly. In terms of Procurement, grant of tenders and all procurement transactions in terms of capital and revenue expenditure items has clearly specified authorization procedures. PETRONAS have also adopted a Financial Control Framework (FCF) to enhance the integrity and the quality of the financial reports that takes account of the adequacy of key internal control system at all times.

4.0 Client Acceptance Process
Various activities and steps are conducted when deciding and considering the acceptance of a new audit client including these eight. Firstly, financial statements and reports are acquired and reviewed. These reports include the company’s annual reports, management reports and income tax returns. Next step includes investigating and inquiring of third parties on the particular company. The opinions of third parties especially the external users such as bank, creditors, suppliers, tax authorities and even consumers are essential to know more about a company. Besides that, permission should be gained to communicate with the

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