Question 2 (a) The planning for the audit of Lenoir Co Ltd's financial statements for the year ending 31 December 2017 will commence shortly. In preparation the audit partner telephoned Lenoir Co Ltd's finance director, Jimmy Gazzel, to set up a planning meeting and to remind him that fees relating to a tax engagement from the previous year were still outstanding. Mr Jimmy raised concerns about the conduct of the previous audit, stating numerous examples of when he and his staff had been interrupted when they were busy. He stated that he wanted guarantees that this year's audit will be more efficient, less intrusive and cheaper; otherwise he will seek an alternative auditor. [10 marks] Required: Evaluate the issue described above, commenting on the ethical and professional issues raised and recommend any actions necessary in response to the issue identified (b) Your firm audits the ABC Co Ltd. During its recent audit, the company's finance director commented on growing competition in the Motor vehicle sector. One rapidly expanding competitor, Axess Co Ltd, was specifically referred to. You are aware that your firm recently acquired another accountancy firm, Masaar Associates, and that Axess Co Ltd is one of their clients. It is hoped that the audit of Axess Co Ltd will be transferred to your department to take advantage of your specialism in Motor Vehicle. [10 marks) Required: Evaluate the issue described above, commenting on the ethical and professional issues raised and recommend any actions necessary in response to the issue identified. (C) Caterpillar Ltd is a long-standing audit client of your firm and is a listed company. James Lenon has acted as audit engagement partner for seven years and understands that a new audit partner needs to be appointed to take his place. James is hoping to stay in contact with the client and act as the engagement quality control reviewer in forthcoming audits of Caterpillar Ltd. Page 3 of 6 Advanced Auditing - ACF3003 (5) Required: Explain the ethical threats raised by the long association of senior audit personnel with an audit client and the relevant safeguards to be applied, and discuss whether James Lenon can act as engagement quality control reviewer in the future audits of Caterpillar Ltd. Evaluate the issues described above, commenting on the ethical and professional issues raised and recommend any actions necessary in response to the issues identified. [10 marks] [Total: 30 marks]