(b) Broadway Group – client acceptance issues

– Resource availability – Group is a large, multinational client
 – Competence of Group audit team – Group has specialised operations and operates in many countries
 – Competence of Group audit team regarding local financial reporting standards
 – Integrity – poor reputation due to alleged environmental damage
 – Integrity – possible illegal payment made/dubious business ethics
 – Ethics – intimidation threat from pressure to maintain low audit fee
 – Understand Group management’s rationale for having more than one audit firm in the Group
 – Ability to obtain evidence from/work with component auditors (2 marks for detailed discussion)
 – Competence of component auditors
 – Evaluate information relating to group structure, complexity of consolidation etc, to help determine the potential audit risk of the engagement
 – New venture in Farland has specific risk attached to it and may be difficult to audit (2 marks for detailed discussion)
 – Access to information/ability to communicate with management and auditors of components of the Group
 – Logistical issues (staff willing to travel, language barriers, cost implications of travel (up to 2 marks)

Maximum marks 10