Assume that you are a manager in an auditing firm in Bangladesh and your firm has been approached by the Board of Envoy Textiles Limited (Envoy). to carry out their audit for the year ended June 30, 2020. You have been asked by one of the audit partners in yourfirm, who is considering whether to propose for the audit engagement, and/or to gathersome information about Envoy.

There are a number of sources that you can access for research in preparing informationfor the audit partners. For example, the website: https://envoytextiles.com would be a goodplace to start doing your research.

Questions to be addressed:

a. What are the business activities of Envoy, and primary regulatory issuesin regards to preparation of financial statements that you will need tounderstand to carry out a successful audit?

Using information, you obtained about Envoy, and the industrythey are in, come to an informed view as to the ‘business’ and ‘industry’risk for this prospective client. Be sure to set out the basis (reasons) foryour decision.

b. Evaluate specific ethical issues that could potentially arise fromperforming a statutory audit on these financial statements. How shouldthose issues be addressed?Refer to the appropriate auditing standards as needed.

c. What are the key accounting issues from your review of other sections inthe annual reports and financial statements, including the accountingpolicies? Based on your understanding of the business and the accountingissues, what specialist skills and competencies will you need to carry outthe audit?

d. Carry out a preliminary analytical review (using ratios) of the financialstatements of Envoy that would be appropriate for the client acceptancestage of the audit. Explain the reason for choosing selected ratios, whatyou find and, how the results would influence your decision to acceptEnvoy as one of your clients.

e. Based on your analysis above elaborate on whether you should acceptEnvoy as a client. Explain why or why not.