- 15 Marks
AAA – Nov 2021 – L3 – Q5 – Ethical Issues in Auditing
Evaluate ICAN requirements on advertising for competing firms and discuss the tendering process, including the concept of "low balling."
Question
Yeye Oge Limited has decided to change its auditors after the current year’s audit. The present auditor has served for a number of years, and there is a mutual agreement on the change. The relationship between the company’s key officials and the partner of the present audit firm had become so cordial that both parties are now concerned about a potential deviation from a professional relationship, hence the mutual agreement for the change of auditors.
You work for the present audit firm, and your partner involved in this case has been asked to participate in the selection of a new audit firm for this client. Both the Chief Executive of the company and your partner have agreed to follow due processes in selecting the new auditor. To ensure proper understanding, certain background processes required for professional selection need to be provided to the chief executive of the company.
Required:
a. Evaluate the requirements of the Institute on advertising and publicity that need to be focused on while considering the competing firms. (5 Marks)
b. Discuss the approved tendering process and evaluation of tenders as a guide, giving proper meaning to the term “Low balling.” (10 Marks)
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