Mr. Conrad P. Saws, President
Mt. Hood Furniture, Inc.
80 Fast Lane
Portland, Oregon 97207

Dear Mr. Saws:
This letter is to thank you for your understanding of the terms and objectives of our agreement and the nature and limitations of the services we will provide, for the year ending December 31, 20X3. Our firm will audit the balance sheet of MT. hood Furniture as of December 31, 20X3, and all related consolidated statements of operations, book of accounts and all financial information that Mt. Hood Furniture comprised for the year ending December 31, 2007
Our audit will express our opinion about whether the financial statements are fairly presented, in all material respects, and in compliance with the United States of America. The audit will be produced with auditing standards generally accepted principles. Our audit will also review your accounting records and other procedures we consider necessary for us to form our opinion. Because we will not be looking over all transactions, there is a risk that some material errors and or other acts that may cause problems may not be detected by us. Our audit is not done to detect errors or illegal acts that may be going on. Our responsibility as auditors are limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors. Our opinion is other than unqualified, we will discuss the reasons with you in advance. If for any reason, we are unable to complete the audit or are unable to form or have not formed an opinion, we may decline to express an opinion or to issue a report as a result of this engagement.
We understand that you are to provide us with accurate information and all related financial information available to us and that you are responsible for the accuracy of that information that you provide. We will advise us during the duration of the audit process what we will need. We will advise you on how to make appropriate accounting principles and their applications and will assist you in the preparation your financial statements however the responsibility for the financial statements remains with you. Management is responsible for making sure that the entities that the company has complies with applicable laws and regulations. We understand that your management and employees will prepare all cash, accounts receivable, and other transactions that we may request and will locate any documents selected by us for testing.
As part of our agreement we will also prepare the federal and state income tax returns for your company for the year ended December 31,20X3. You should keep all documents, cancelled checks and all other documents that support your reported income and deductions. They may be needed to prove accuracy of your returns. We will begin our Audit on September 15,20X3 and to complete your tax returns and issue our report no later than March 1,20X4. We will do the counting of inventories for the company on December 31,20X3.
It is our estimate the fees for our services will range from $20,000 to $25,000 for the audit and $7,500 to $10,000 for the tax return. You will also be billed separately for out of pocket expenses that our firm may incur during our work. Remember these estimated costs are based on the facts that we will not run into any unexpected circumstances that causes a halt to the audit by your company. If during our audit period of time we foresee that this is going to take more time than we estimated than we will submit another proposal included with additional fees at that time.
If you ate in agreement with our engagement letter than please return this letter back to us signed. If you have any questions, please let us know and we can discuss them at a later date.
Yours truly.
Reddy and Abel,
Certified Public Accountants


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