O Ch. 7: Case 7-25 – New Client Acceptance, Part B

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Reddy & Abel Certified Public Accountants LLP.

June 9, 2012

Mr. Conrad P. Saws
Mt. Hood Furniture Inc.
1234 Dream Lane
Little Saw, Oregon 45210

Dear Mr. Saws,
This letter is to confirm the services we will be providing for Mt. Hood Furniture Inc., for the year ending December 31, 2012. Our staff will examine and audit Mt. Hood Furniture Inc.’s balance sheet as of December 31, 2012 and the income, retained earnings, and cash flows statements as well. The audit that our company completes will be in compliance with the Generally Accepted Auditing Standards, or GAAS. These standards are in place to make sure that we perform our duties as auditors to assure that the financial statements of Mt. Hood Furniture Inc. are complete and accurate. The audit that our company will perform will include assessments performed through testing that includes the evidence supported in the financial statements. Our staff will assess the accounting methods and the estimates that were made by the management team at Mt. Hood Furniture Inc. It is important to understand that is difficult to detect all material irregularities because of the nature of them. Our company will report to Mt. Hood Furniture Inc. any suspicious activity that comes up throughout the auditing process. The fees for our auditing services estimate between $20,000 and $25,000 and our tax services fees estimate between $7,500 and $10,000. We are happy to perform the required services for your company. Please sign and return the enclosed company of this letter to indicate that it is within accordance of your understanding of the arrangements for our review. Yours faithfully

Reddy & Abel, CPAs
R. U. Reddy
Partner
Acknowledged on behalf of

______________________
(entity)
by____________________
(sign)
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