You are a partner in an auditing firm that has just successfully tendered for the audit of Unity Ltd. a company that deals in children's clothes with branches across the country. The tender opportunity was received cold, meaning, the company and its officers are not known to the firm. The company has just been incorporated and has not previously had an audit. You are about ready to accept the nomination.

Required

(a) Explain the procedures you and your auditing firm should carry out prior to accepting this client.

In the course of your acceptance procedures, you received a reference from a business contact of yours concerning one of the five directors of Unity Ltd., Mr. Allan Sarkodie. It stated that your business contact had done some personal tax work for Mr. Sarkodie ten years ago, when he had found Mr. Sarkodie to be difficult to keep in contact with, slow to provide information and he had suspected Mr. Sarkodie of being less than entirely truthful when it came to his tax affairs. As a result of this distrust, he had ceased to carry out work for him.

Comment on the effect this reference would have on accepting nomination.