Activity $1$

Your friend, Patrick Wilson gave you a call this week to arrange a meeting. He was very secretive as to why he wants to see you. After a few beers Patrick told you about one of his audit clients $($Cheap Trick Limited$)$ that gave him a lucrative offer, all he had to do is to make sure that they get an unqualified opinion. Patrick is a senior partner at one of the big auditing firms and is not up to scratch when it comes to the theory of auditing, since his primary focus is on tax. Cheap Trick Limited is one of the biggest entities listed on the JSE. There is a lot of users that will rely on the company$$s audited financial statements to make investment decisions.

Source: Marais, M$.(2020)$

Required:

Patrick is aware of the fact that you are a second$-$year auditing student. He asks you to advise him in terms of the Auditing Professions Act on the following matters:

$1\mathrm{.}1$ Should he decide to accept the offer from Cheap Trick Limited and a lot of people lose money due to an incorrect unqualified opinion, will he be liable?

$1\mathrm{.}2$ Will a reportable irregularity exist if Patrick decides to accept the offer? Explain the steps that need to be followed.

$1\mathrm{.}3$ What requirements need to be met before an audit opinion can be issued?