Cairns Pty Ltd (Cairns) is a web design consultant that has been operating in the state of Queensland for the past five years It is about to enter the national market by establishing branches in all state and territory capital cities The chairperson of the audit committee at Cairns discussed the expansion plans with its auditor of the past five year, Colin Brown and Associates (CBA) Both parties agreed that CBA should step down as the auditor because it did not have the capacity, nor the interest, to operate in a national market Consequently, Cairns put its audit out to tender You are an Audit Partner with Queensland Quality Audits (QQA) and are considering tendering for the audit of Cairns The tender document contains, amongst other information, the following Cairns has a relatively narrow spread of ownership, and, as such, has determined that it is not a Reporting Entity and thus prepares Special Purpose Financial Statements Cairns has significant research and development assets, on which it holds patents and has a number of licenses that allow it to use highly specialised software programs that were developed by a major UK internet provider You ask one of your assistants to undertake research on Cairns Your assistant reports back to you that she discovered the following Two years ago, a director of Cairns directors was under investigation for insider trading While no charges were laid, the director was the subject of considerable media attention (all of which was negative) over a period of 18 months The largest client of Cairns is a major shareholder of the company and holds a seat on the board REQUIRED Based only on the information provided above, state three issues that you believe you should consider before tendering for the audit of Cairns In your answer explain the importance of each issue by reference to the facts of the case

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Cairns Pty Ltd (Cairns) is a web design consultant that has been operating in the state of Queensland for the past five years. It is about to enter the national market by establishing branches in all state and territory capital cities. The chairperson of the audit committee at Cairns discussed the expansion plans with its auditor of the past five year, Colin Brown and Associates (CBA). Both parties agreed that CBA should step down as the auditor because it did not have the capacity, nor the interest, to operate in a national market. Consequently, Cairns put its audit out to tender.

You are an Audit Partner with Queensland Quality Audits (QQA) and are considering tendering for the audit of Cairns. The tender document contains, amongst other information, the following:

Cairns has a relatively narrow spread of ownership, and, as such, has determined that it is not a Reporting Entity and thus prepares Special Purpose Financial Statements.
Cairns has significant research and development assets, on which it holds patents; and has a number of licenses that allow it to use highly specialised software programs that were developed by a major UK internet provider.

You ask one of your assistants to undertake research on Cairns. Your assistant reports back to you that she discovered the following:

Two years ago, a director of Cairns directors was under investigation for insider trading. While no charges were laid, the director was the subject of considerable media attention (all of which was negative) over a period of 18 months.
The largest client of Cairns is a major shareholder of the company and holds a seat on the board.

REQUIRED:

Based only on the information provided above, state three issues that you believe you should consider before tendering for the audit of Cairns. In your answer explain the importance of each issue by reference to the facts of the case.