750 Words

4. Ming LLP is an established independent audit firm operating solely in the south west region of the country and provides audit and professional services primarily to local manufacturing businesses. Ming LLP has six partners and an annual turnover of 2 million. You have been provided below with scenarios regarding either tenders for new engagements or continuation of existing engagements. Opportunities to Tender for Engagements with New Clients: 1. Fung plc is a fast growing business specialising in the provision of data analytics for large high street retailers. 2. Singh Ltd is a newly established, fast growing business manufacturing scooters. The business is refinancing and requires audited accounts to support the bank loan application. 3. Guo plc manufactures large turbines for electricity generation. Guo plc have indicated that annual audit fees will be in the region of 400,000. 4. Hui Ltd is suffering severe cash flow problems; its bank has urgently requested a set of audited interim accounts. Initial enquires by Ming LLP establish that Hui Ltd is likely to be in breach of bank loan covenants, a fact the directors of Hui Ltd failed to disclose to Ming LLP. 5. Gigantic plc manufactures motor vehicle components with factories in Europe, America and the Far East. Existing Audit Clients: 6. Ming LLP has audited Liu plc for a number of years and has been approached by Liu plc to promote a new share issue. 7. A junior member of the audit team working on Wei plc audit recently resigned from Ming LLP and took up a senior management post with Wei plc. 8. Ming LLP has recently been approached by the directors of Jiu Ltd to prepare the monthly and annual financial statements of Jiu Ltd. Required a) For each of the scenarios, state with reasons ONE type of threat in accepting or continuing with the engagement and discuss any mitigating factor Ming LLP could take to remove that threat. (15 marks) b) Write a memo explaining to new graduate recruits why it is vital that they learn and comply with the highest professional and ethical values. (10 marks)