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:

Viper Co
You have been approached by Viper Co, a retail company, to provide audit and tax services. In response you have written to the outgoing auditor to ask if there are any matters which you should be made aware of which might prevent you from accepting the assignment. Despite a number of follow up phone calls, you have not been able to obtain a response from the outgoing audit firm. On discussing this with the management team of Viper Co, you are made aware that the company is suing the outgoing auditor for damages due to the detrimental effect on their reputation following the auditor issuing a modified opinion, which the directors of Viper Co felt was inappropriate. The reason for the modified opinion was the application of an accounting treatment which the outgoing auditor considered to be inappropriate and a material misstatement.

Required:
Comment on the ethical and other professional issues raised, and recommend any actions which should be taken in respect of:
(b) Viper Co; (7 marks)