You are the audit manager of Mitch & Co, in charge of the audit of Reiki Bhd (Reiki).This company manufactures car components for both local and oversea markets through dealers and wholesalers. The financial year June 2021 audit is about to be completed. You plan to recommend to the engagement partner that an unmodified audit report be issued. As part of your final review, you read Reikis Board of directors minutes of last two meetings, one of which was held in April 2021 and another in end of May 2021. One of the significant issue that caught your attention is on the whistleblower protection highlighted during the boards meeting which was minuted. Five weeks before the financial year end, a disclosure was made to the board by the production manager of Reiki, claiming protection under so-called whistle-blower legislation i.e. The Whistleblower Protection Act (WPA) 2010. The production manager alleged that the components used in one of the companys most popular products do not meet the required industry international quality standards. The said defective components used could, in unfavourable conditions, expose cars to the risk of explosion. This could lead to fatal harm to the driver and passengers. As part of the initiative, the Board requested a team of senior technical specialist within Reiki to investigate and submit a report. The investigation was completed in three weeks and a details report has been presented to the board. The findings have concluded that, the disclosure made by the whistleblower is baseless, rejecting the allegation of the whistleblower. The team of technical specialist further highlighted that, the particular type of components in question has been on the market for more than 15 years. So far, no reports concerning the problems of the components have been received. Recently the chairman chaired a lengthy meeting with the board members to deliberate on the said report. During the discussion the board members were concerned that the allegation might reach public domain which will affect the reputation of Reiki. The board members unanimously agreed to consult the companys lawyer. The lawyer is required to draft a formal reply to the whistleblower denying the substance of his allegations and warn him that the company will not hesitate to take legal action, should he continue to harp on this matter. This process is still ongoing.

(b) Discuss the significance to the auditor on the financial statements audit of Reiki Bhd for the year end 30 June 2021 in relation to the disclosure made by the production manager (whistleblower)