QUESTION 2 A. TN & Co was appointed to perform audits for Nina Sdn Bhd. During the audit, a junior team member discovered a major internal control weakness regarding the procedures for the issuance of the company cheques. The finding was then highlighted to the audit team leader and documented in the audit working papers. However, it was not discussed with the management and included under non-reporting points. Later, Nina Sdn Bhd applied for RM500,000 loan from UnBank. The financial statements which were duly audited by TN & Co were among the main documents submitted to UnBank. After performing credit analysis, UnBank approved the loan to Nina Sdn Bhd. Subsequently, a full disbursement was made in accordance with the terms of the agreement. For the first 6 months, Nina Sdn Bhd appeared not to have a problem following the agreed repayment scheduled. Problems started taking place when Nina Sdn Bhd was placed under liquidation as a result of major embezzlement by the company's finance manager involving a huge bank balance and short term investments. Required: i. Justify whether the auditor has exercised due care in the audit of Nina Sdn Bhd (6 marks) ii. Clarify the possible liability of the auditor if a lawsuit is initiated by UnBank against Nina Sdn Bhd. Quote relevant legal case to support your answer. (8 marks) An audit firm should establish a monitoring process designed to provide it with reasonable assurance that the policies and procedures relating to the system of quality control are relevant, adequate, and operating effectively (ISQC1). B B. Required: Determine three (3) matters that should be considered by the firm to monitor the quality control policies and procedures. (6 marks) Total: 20 marks