accounting

MEMORANDUM OF RW COMPANY

TO : Audit Committee Members

FROM : Abdul jamaluddin

DATE : April 7 , 2009

SUBJECT : Olympic Auditors are not qualified as client to RW Company

Introduction

Corporate governance is a system by which companies are directed and control in the best interest of its shareholders and other stakeholders This resulted from the concern separation of ownership and control in an organization . The US model is enshrined into law by virtue of Sarbanes Oxley (SOX . It is , therefore a rule base approach . The Security and Exchange Commission (SEC ) provide

strict rules for auditors independences

The purpose of this memorandum is to determine whether or not Olympic Auditors are qualified to audit the records of RW Company

Case evidence and decision

P . Radcliffe is appointed CFO of RW Company and is in partnership with B . Rodger (Audit partner to RW Company . They are closely related parties

This could result in a threat to independence and lack of objectivity by the Audit partner

RW Company is considering an IPO in 2007 and as such , the Company will be bound to comply with the Sarbanes Oxley rules (SOX . SOX include requirements for the Securities and Exchange Commission (SEC ) to issue certain rules on corporate governance . Non compliance with the SOX rule by management and auditors is seen as criminal and might lead to punishment

The fact that

. Radcliffe is a CFO whose main responsibility is dealing with the financial areas of the Company , and is closely related to Olympic Auditors , would impair...