Question
You are an audit manager in Colly & Co, a firm of Chartered Certified Accountants. A new audit client, Hamchester United ('HamU'), is a listed
You are an audit manager in Colly & Co, a firm of Chartered Certified Accountants. A new audit client, Hamchester United ('HamU'), is a listed football club which in recent years has bounced between the premier division and the division below. It ended the 20X6/X7 season at the bottom of the premier division and was relegated to the lower division in May 20X7. The football season runs from August to May, while the company's reporting period ends on 30 June. The first year of audit will be the year ending 30 June 20X8.
You are provided with the following extract of an email from the HamU Finance Director:
Extract of email from the HamU Finance Director
'The board has just been informed of imminent changes to corporate law. In particular, they have been warned that auditors can now seek to negotiate limited liability agreements with their clients. They have informed me that if Colly & Co seeks to negotiate such an agreement in 20X9, they will put the audit back out to tender as soon as possible. What is your likely response to this?
In addition to the audit, we talked about Colly & Co performing some additional work for HamU-we are always in need of good advice about how to treat the various schemes, trusts and companies set up by our players to manage their tax affairs as they change so much-can you help us with these and produce some of the preliminary calculations for us?
Finally, you may remember I joked about the club needing one of those wealthy investors to help us out if we can't get promotion back to the premier division-we may have found someone willing to support us but I need some advice on how we should proceed with this-can you help with this as well?'
Required:
Explain the professional and ethical matters that our firm should consider when responding to theFinance Director's email.
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