Fruit & Veg (Pvt) Ltd engages in supplying of fruits and vegetables to hotels. The board of Directors of the company has requested your firm to conduct the statutory audit for the year ended 31st December 2020. Previous audit firm which is a leading audit firm in the country has declined the audit and it has been communicated in writing to the Board of Directors of the company. During the preliminary discussion with the management, you noted that the companys annual turnover stated in the financial statements was P800 million and the cash at bank was P1.5 billion. It has come to your attention that there is an ongoing court case against the company, but this was not an agenda item for the preliminary discussion. Further, the Board of Directors expects the audit to be finalized by 20 April 2021 and during this period all three partners in your firm are involved in major deadline audits of the clients and two senior level staff will be seconded to an overseas office.

You are required to:

a. Assess four matters you need to consider before taking a decision to accept Fruit & Veg (Pvt) Ltd.s audit as your audit client.

b. In the case of audit engagement, it is in the public interest and therefore, it is required by the Code of Professional Ethics that members of audit teams and firms shall be independent of audit client. State and explain four circumstances that can be recognized as possible threats to independence.

c. High-quality auditing entails the auditor using professional judgment and, more significantly, a professional sceptical mindset. Explain the meaning of the term "professional skepticism" and the stage(s) of the audit where it should be used.