Answer Happy

You are a partner in an auditing firm that has just successfully
tendered for the audit of Unity Ltd, a company that deals in
children’s clothes with branches across the country. The tender
opportunity was received cold, meaning, the company and its
officers are not known to the firm. The company has just been
incorporated and has not previously had an audit. You are about
ready to accept nomination. Required a) Explain the procedures you
and your auditing firm should carry out prior to accepting this
client. In the course of your acceptance procedures you received a
reference from a business contact of yours concerning one of the
five directors of Unity Ltd, Mr Allan Sarkodie. It stated that your
business contact had done some personal tax work for Mr Sarkodie
ten years ago, when he had found Mr Sarkodie to be difficult to
keep in contact with, slow to provide information and he had
suspected Mr Sarkodie of being less than entirely truthful when it
came to his tax affairs. As a result of this distrust, he had
ceased to carry out work for him. b) Comment on the effect this
reference would have on accepting nomination