You are a manager in Yawson & Co, a firm of Chartered Accountants. You have just attended a monthly meeting of audit partners and managers at which client-related matters were discussed. Information in relation to two clients, which were discussed at the meeting, is given below. Kid Ple The audit report on the financial statements of Kid Plc, a long- standing audit client, for the year ended 31 December 2020 was issued in April 2021, and was unmodified. In May 2021, Kid Ple's audit committee contacted the audit engagement partner to discuss a fraud that had been discovered. The company's internal auditors estimate that GHS4.5m has been stolen in a payroll fraud, which has been operating since May 2020. The audit engagement partner commented that neither tests of controls nor substantive audit procedures were conducted on payroll in the audit of the latest financial statements as in previous years' audits there were no deficiencies found in controls over payroll. The total assets recognised in Kid Ple's financial statements at 31 December 2020 were GHS80m. Kid Plc is considering suing Yawson & Co for the total amount of cash stolen from the company, claiming that the audit firm was negligent in conducting the audit. Nana Ple Nana Ple is a clothing manufacturer, which has recently expanded its operations overseas. To manage exposure to cash flows denominated in foreign currencies, the company has set up a treasury management function, which is responsible for entering into hedge transactions such as forward exchange contracts. These transactions are likely to be material to the financial statements. The audit partner is about to commence planning the audit for the year ending 31 July 2021. Required: Explain the matters that should be considered in determining whether Yawson & Co is liable to Kid Plc in respect of the fraud.