QUESTION ONE $[20]$

Before your firm accepts any additional ongoing engagement, for example new audits, the

partners meet to decide on whether the engagement should be accepted. The firm is mindful of

the requirements to conduct preliminary engagement activities including compliance with ISA

$220$ Quality management for an audit of financial information. The following prospective audit

clients are being evaluated. Your firm has seven partners and a diverse portfolio of clients ranging

form small business entities to medium$-$sized companies. None of its existing audit clients is a

listed company.

$1.$ Apex $($Pty$)$Ltd a company which sells equipment to the mining industries, has approached

your firm with an offer that you take over the audit of the company. A significant amount

of additional non$-$audit work has also executive directors were recently alleged to have

been involved ii tender fraud, but nothing has been proved. They have both denied any

involvement. The current auditors have indicated their intentions not to make themselves

available for reappointment.

$2.$ Calypso distributors Ltd$,$ a large fishing company in Durban, which was recently convicted

for exceeding its fishing quotas, and threatened with closure by the authorities should it

occurs again as this was not a first offence. Should your firm accept engagement, it will

be the third auditing firm to have been appointed in the last four years. The previous

auditors have resigned. The company is a public company but is not listed.

$3.$ Impetus $($Pty$)$ Ltd$,$ a medium $-$sized company which is about to expend considerably

through a BB BEE dearly that involves a large, listed company. The listed company

requires that Impetus $($Pty$)$ Ltd be externally audited annually. Our firm has no experience

in the industry in which Impetus $($Pty$)$ Ltd be and the listed company operate.

$4.$ Appollo $($Pty$)$ Ltd$,$ a small company which is owned by Frank Ngabo, the father of one of

your firm$$s partners. Frank Ngabo believes that having the company audited externally

adds to its credibility when negotiating with prospective business patterns.

$5.$ Akili $($Pty$)$ Ltd$,$ is medium$-$sized company in the light engineering sector. The directors

informed your firm that they were changing their auditors because their previous auditors

had $$different views$$ to them $($the directors$)$ on which accounting policies were

appropriated for their company. They have declined to provide specific details. The

previous auditors would not comment on this stating only that the directors of Akili $($Pty$)$

Ltd had not given them permission to discuss the company$$s affairs.

$6.$ Impi $($Pty$)$ Ltd$,$ a company which provides companies and governments operating in Africa

with security personnel, including bodyguards and equipment such as armoured vehicles

and firearms. The audit fees paid to the previous auditors were substantial.

$7.$ Axiom financial services client, Union Bank, is looking for new auditor. During the lats year

the company had been in the news for several reasons, including landing a multi$-$million

dollar deal, a cybercrime incident where some of its clients$$ information may have been

compromised$($the scale of the event has not been determined$)$; making a large donation

to welfare organization; and lastly the firing of its head of trading due to $$suspicious

trading$.$ The cybercrime incident and the firing of the head of trading have caused much

social media traffic.

YOU ARE REQUIRED TO:

Discuss the matters to which your firm should give consideration, when deciding on whether to accept the above prospective audit appointments. Kindly use APA referencing. Answer like you are me and not in $3$rd person. Kindly answer the question for $20$ marks.