Please answer a b c d e HP Foods is a private company that has been in operation for many years in Birmingham. Owing to a rising need to raise additional capital the shareholders have passed a resolution to convert the company into a public company and seek listing on the London Stock Exchange. You have been contracted to help the Directors to carry the resolution through. During your preliminary discussion with the Directors, you realised that they were not very conversant with the listing rules of the London Stock Exchange and you drew their attention to the establishment of an Audit Committee as a condition for listing on the London Stock Exchange. The Directors agreed to discuss the establishment of the Audit Committee at the next emergency meeting and invited you to be present.
	Required:
	a.	Recommend what should be the composition of the audit committee and describe its responsibilities to the Directors as prescribed by the UK Corporate Governance Code (2018).
			(10 marks)
Your firm has been the auditor of J. Hudson & Co, a listed manufacturing company based in the West Midlands, for a number of years. The engagement partner has asked you to describe the matters you should consider when planning the audit for the year ended 31 December 2020. During a recent visit to the company you obtained the following information: The company installed a new computerised inventory control system, which has operated from 1 May 2019. Since the inventory control system records inventory movements and current inventory quantities, the company is proposing: to use the inventory quantities on the computer to value the inventory at the year-end, and not to carry out an inventory count at the year-end. [CONTINUED] You are aware there have been reliability problems with the companys products, which have resulted in legal claims being brought against the company by some local customers, and other customers refusing to pay for the products. The Chief Financial Officer and purchasing manager were dismissed on 1 July last year. A replacement purchasing manager has been appointed but it is not expected that a new Chief Financial Officer will be appointed before the yearend of 31 December 2020. The chief accountant will be responsible for preparing the financial statements for audit.
	Required:
	b.	Critically evaluate the reasons why it is important that auditors should plan their audit work before commencing an audit assignment.
			(10 marks)
	c.	Describe FOUR audit risks and explain the auditors response to each risk in planning the audit of J. Hudson & Co.
			(10 marks)
You are the partner responsible for the audit of Kingston Inc. for the year ended December 2019. The final audit has been completed and you have been asked by the audit manager to draft the audit report. The manager is aware that there is guidance for auditors relating to the audit report in ISA 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditors Report. The manager has asked for your assistance in this matter.
	Required:
	d.	Define an Emphasis of Matter paragraph and explain, providing examples, the use of such a paragraph.
			(10 marks)
	e.	Define an Other Matter paragraph and explain, providing examples, the use of such a paragraph.
			(10 marks)