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Your firm has recently completed the audit of Boo Show Company. After extensive discussion with the company's management, the audit opinion has been qualified in
Your firm has recently completed the audit of Boo Show Company. After extensive discussion with the company's management, the audit opinion has been qualified in respect of the auditors' inability to agree with management on the appropriateness of a provision for obsolete inventory. The Managing Director (Dr. Boo) has informed you that the company intends to change its auditors and engage the services of a small local firm of accountants. He informed you verbally that the reason for their decision is the disagreement over the provision for inventory obsolescence. Boo Show Company is convinced that the new auditors are more likely to accept the accounting policies of management. You have received a letter from the new auditors enquiring if there are any professional reasons why they should not accept appointment as auditors of Boo Show Company. Required: (a) In view of the attitude of management towards your firm, discuss the factors which the new auditors need to consider before accepting the appointment. (b) Explain the ethical implications for the new auditors if they accept the appointment as auditors
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