Sample

Question 4c

You are a senior manager at Cobra & Co, a firm of Chartered Certified Accountants. You are responsible for reviewing quality control and ethical matters which arise with the firm’s portfolio of clients. During recent investigations you identified the following matters:

Adder Co

Adder Co is a listed audit client of your firm. The management team of Adder Co has asked you to perform a valuation of the shares of another audit client, Slowworm Co, with a view to buying the entire shareholding. Slowworm Co is a private company whose shares are owned entirely by the original founder, Mr Jim Slow.

Required:
Comment on the ethical and other professional issues raised, and recommend any actions which should be taken in respect of:
(c) Adder Co. (6 marks)