Question 2

Your firm has recently been invited to tender for the provision of audit and assurance services to Gagak

Berhad (Gagak) a scientific research company. Gagak requires the following services to be provided:

Review of and report on Gagak's interim financial information for the six months ending 31 March

20X4.

External audit of Gagak's financial statements for the year ending 30 September 20X4.

Examination of and report on the financial information of Mini Sdn Bhd (Mini), a medical research

company, identified by Gagak's board of directors as an acquisition target. The directors require

your firm's service to include helping to determine an appropriate valuation of the shares in

Mini.

Bakar, the partner in charge of considering your firm's response to the invitation to tender, has

asked you to help him and has provided you with the following additional information:

Gagak provides scientific research services to the pharmaceutical, veterinary and food industries

and is subject to a number of laws and regulations. In 20X2, three employees were suspended

after serious breaches of animal protection laws were identified by a Malaysia current affairs TV

programme.

Gagak controls subsidiaries operating in Europe, the US and Japan and is seeking to expand the

group through the acquisition of the share capital of Mini.

Gagak's directors have invited your firm to tender due to its experience in providing external audit,

assurance and advisory services to a number of companies operating in the scientific research

sector. Mar, the finance director of SciRay Berhad (SciRay), a supplier to Gagak, has also

recommended your firm to Gagak's directors. SciRay is one of your firm's largest external audit

clients.

Gagak's existing external auditors resigned from office after completing the external audit for the

year ended 30 September 20X3.

Requirements:

a) Identify and explain the matters your firm should consider before deciding to tender for the

services required by Gagak.