Reference no: EM132859929

Question - Client Acceptance - Gavin, Kim & Associates is a small, but rapidly growing, accounting firm. Its success is largely due to the growth of several clients that have been with the firm for more than five years. One of these clients, Cortina Company Inc., is preparing to transition from a private company to a publicly traded company and must comply with additional reporting regulations. Cortina Company's rapid growth has meant that it is financially stretched, and its accounting systems are struggling to keep up with the growth in business. The client continuance decision is about to be made for the next fiscal year.

The managing partner of Gavin, Kim & Associates, Rachelle Summer, has recognized that the firm needs to make some changes to deal with the issues created by the changing circumstances of its major client and the firm's overall growth. She is particularly concerned that the firm could be legally liable if Cortina Company's financial situation worsens and it fails.

Required - Evaluate the factors that Rebecca should consider when making the client continuance decision for Cortina Company Inc. for the next fiscal year.

In your response, make sure that you address the unique factors from this case that you would consider, also factors from the perspective of the audit standards that could be relevant.