Scraps and More Limited is a manufacturer of retreaded tyres in the Caribbean. The manufacturer has three divisions that operate in Jamaica, Barbados, Trinidad and Tobago. The division operates without much intervention from corporate headquarters in Jamaica, Scraps and More Limited is listed on the Jamaica Stock Exchange. You have been approached to perform the audit for the year ending December $31,2022.$ Your firm was appointed external auditors of Seraps and More Limited starting September $1,2022.$ Your firm has not audited this company before in an external capacity but your firm took the audit because of its extensive knowledge of Scraps and More Limited. Scraps and More Limited has previously utilized your firm as its internal auditors. The directors have indicated to you informally that the reason they wish to change auditors is because of a disagreement about related party disclosures in the financial statements in the previous year. The directors have asked your firm to commence the audit immediately because audited accounts are needed by the Companies Office of Jamaica by April $1,2023.$ Although you are short$-$staffed and it is the firm's busy season, you have decided to proceed with the external audit for Scraps and More Limited. You are afraid that the company will not use you for its internal audit service it you refuse the engagement. Your firm will now be dependent on Scraps and More for $35\%$ of its revenue. In obtaining an understanding of Scraps und More Limited, the audit senior noted that Scraps and More Limited has expanded rapidly in terms of its client base, the number of staff it employs, and its profits before COVID$-19$ pandemic. However, a new competitor has offered substantial price reductions on retreaded and new tyres to enter the market in $2022.$ The Chief Executive Officer responded to the competitor's netions by matching the price cuts to maintain its market During the audit of inventory you have observed that there are substantial increases in inventory and profitability which are inconsistent with Stocks and More in previous years. Additionally, matenal amounts of inventory are stored in six locations in Jamaica. It is difficult to physically visit all the locations to complete inventory counts, given your firm's limited resources. You noted that there were no receiving reports for inventory valuing ISS. $400\mathrm{.}000$ but you were able to trace the items to purchase orders and vendors invoices from & new supplier with a P$.$O$.$ Box address. You had limited time to review inventory being held for customers and to sample inventory with missing tags valuing $$1,600,000.$ The test of controls over purchases revealed the discrepancies in the table below. The substantive test of accounts payables showed that some amounts were outstanding for more than six months which is inconsistent with Scraps and More Limited standard two months. The senior and audit manager accepted the results because there was limited time to confirm.

Required:

Describe four matters to consider within your firm and other procedures that must be undertaken before accepting the appointment as external auditors to Scraps and More Limited.

An auditor is required to gather sufficient appropriate evidence to support conclusions drawn and an audit opinion.

a$.$ State six $(6)$ audit procedures that were not followed to verify inventory and accounts payables.

b$.$ What are three $(3)$ control deficiencies that are noted in the test of controls for purchases and inventory?

c$.$ What are TAS $24$ requirements for related party disclosures?

d$.$ Prepare an extract of the 'basis for opinion' and opinion' paragraphs for the audit report that you recommend in this case. balances and meet the reporting timeline.