Question 3: You are a qualified accounting technician working for a small firm of accountants of two partners with approximately three hundred clients ranging in size up to small, limited companies. The firm employs one other qualified technician and four unqualified assistants. At a recent meeting of local businessmen, you met a former close friend whom you had not seen for a number of years. It transpired that your friend is now Chairman of a small group of companies based in a neighboring town. Shortly after the meeting your friend telephones to enquire whether your firm is prepared to accept an appointment as the groups auditors to replace the existing auditors. Required: a- Draw up a checklist of the points you would need to consider before accepting the appointment covering: I. Legal II. Ethical III. Practical. And IV. Other matters. b- Outline the rights of the existing auditor in respect of the proposals to replace him. c- State what you understand by a letter of engagement and list its main contents. d- Would either of the following circumstances prevent you from accepting an appointment? Give reasons for your view. I. The existing auditor contacts you to say that his fee for the previous years audit has not been paid. II. The previous years audit report contains a qualification concerning a failure to maintain adequate records of stocks at one subsidiary.