Question 2

(7 marks)

The audit partner has just advised you that he has been approached to accept the appointment of auditor to Bungie Limited. Bungie Limited is a manufacturer of gaming machines and has been named in a recent anti-corruption enquiry as having offered incentives to state government members to support a proposed bill that would allow an increased number of gaming machines in licensed premises. No charges have yet been laid against Bungie Limited or any of its employees. The audit partner explains to you that Bungie Limiteds auditors were re-appointed for the current financial year at the Annual General Meeting held two months ago. However, Bungie Limiteds managing director is unhappy with the existing auditing firm as the audit partner assigned to Bungie Limited has been changed.

Required: The audit partner is unsure whether he should accept the appointment and has asked you to outline any ethical, legal, and other factors to consider in his decision about whether to accept the appointment for the current year and indicate the steps that need to be taken prior to the appointment.