QUESTION 4 Your firm is considering whether to accept the following four unrelated prospective engagements: Ace Berhad (Ace) Your firm has been the external auditor of Ace for a number of years. Ace has recently reduced the number of employees working in its accounts department to save costs. The directors have asked your firm to accept reappointment as external auditor for the year ending 31 December 2022 and have requested that your firm prepare the year-end financial statements in addition to the audit. Your firm has not prepared the financial statements in previous years. The engagement partner has estimated that your firm's current fee from Ace, of RM600,000, would increase by 25% as a result of providing the additional service. Your firm's gross annual fee income, excluding amounts received from Ace, is RM6.4 million. Joy Berhad (Joy) Your firm's report to management and those charged with governance, prepared during the external audit of Joy for the year ended 30 September 2021, identified a number of significant internal control deficiencies in Joy's inventory system. In March 2022, the company modified its inventory system to address the deficiencies identified in your firm's report. The directors of Joy have requested that your firm accept an engagement to evaluate the design and operation of the system and confirm in an assurance report that the system is now free from any control deficiencies. Continued ...