Ethical and other matters to be considered before accepting Setter Co as a client of the firm
Up to 1½ marks for each ethical or other professional issue explained:
– General requirements of ISQC 1
– Competence to perform the work – this should not be a problem
– Intimidation and self-interest threat from Vizsla Co
– Low fees potentially impair quality of work
– Pressure on fees from Setter Co indicates lack of integrity
– Self-review and management threat from performing tax planning for the company
– Safeguards should be used to reduce threats to an acceptable level, if this is not possible the tax planning should not be performed
– Providing personal tax advice not ethically wrong but may not want to accept work due to integrity issues
– Breach of employment law and taking money from pension plan indicates lack of integrity/criminal activity/poor reputation

Customer due diligence – reasons and recommended information
Up to 1½ marks for each point explained/recommended:
– Part of anti-money laundering regulations (up to 3 marks for detailed explanation of regulations)
– Identity of Gordon Potts – passport, recent utility bills or bank statements
– Identity of other shareholders including the other family members and other 10% shareholders
– Setter Co – the company certificate of incorporation, to confirm legal status, date and place of incorporation
– A Companies House search (or equivalent) on Setter Co – confirm the existence of the company, the shareholders and directors, beneficial owners
– Other companies controlled by Gordon Potts – confirm their existence and the nature of the relationship with Setter Co
– Review of the latest financial statements of Setter Co, and the other companies in which Gordon Potts has an interest should be reviewed
– Identify the source of funding, when funding is repayable and the existence of any security provided by the company or by personal guarantee of owners
– Facts surrounding the breach of employment law as reported by the newspaper
Maximum marks 16