Question 4b

The audit committee of another client, Mumbai Co, has asked the partner to consider whether it would be possible for the audit team to perform a review of the company’s internal control system. A number of recent incidents have raised concerns amongst the management team that controls have deteriorated and that this has increased the risk of fraud, as well as inefficient commercial practices. The audit report for the audit of the financial statements of Mumbai Co for the year ended 31 March 2016 was signed a few weeks ago. Mumbai Co is a listed company.

Required:
In respect of the request for Chennai & Co to review Mumbai Co’s internal control systems:

Identify and discuss the relevant ethical and professional issues raised, and recommend any actions necessary. (8 marks)