QUESTION ONE: $[20]$

Keep Trying Inc. has grown tremendously in the past few years, with most clients

requesting$/$requiring an audit of their annual financial statements.

You have worked at this firm for a number of years and have been a member of the Quality

Control Committee for the most part. The committee reviews current and potential clients

before accepting engagements for the following year.

Below is a list of the clients;

$1.$ Sailor Made Ltd $($a public but not listed entity$),$ has recently been convicted for

exceeding its fishing quotas. As a result, the company has been threatened by the

authorities which would result in the company closing its doors. The previous

auditors have resigned. $(5)$

$2.$ Chocolate Cake $($Pty$)$ Ltd $($a large baking company$)$ is owned by the wife of Keep

Trying Inc.$$s partner in charge of the tax department. Calculation of the PI Score

revealed that Chocolate Cake $($Pty$)$ Ltd must be externally audited. $(5)$

$3.$ Give It A Shot $($Pty$)$ Ltd engages in the selling of firearms as well as hires out

mercenaries to foreign governments involved in disputes. The company is not listed.

$(5)$

$4.$ Ruby Ruthless is a chairman on the board of Tech Savvy Ltd $($ a listed entity$).$ Ruby

is quite outspoken and vocal. She regularly expresses her critical thoughts on King

III$$s Report on Corporate Governance. She believes that all transparency, disclosure

and fairness is not required. $$It gives competitors insight into your business!$$ she

says. $(5)$

Required:

Prepare a memorandum to the board of directors detailing the concerns about

acceptance$/$continuance of an audit engagement on the above clients.