Question 3 (20 Marks) The audit senior has asked you to consider the acceptance of a new potential client of your firm, Rothmans Group. Your firm name is Dealt & Co. Dealt & Co has been approached by the audit committee of Rothmans Group to act as its audit provider. The parent company of Rothmans is listed on the stock exchange and has a total of 9 subsidiaries, 6 of which are foreign subsidiaries. Rothmans is a food processing company and each of the other subsidiaries of the parent provided a particular important ingredient that is used by the parent company’s main processing plant, which is based in this country. If your firm, Dealt & Co accepts the appointment, it will provide the audit for the parent’s consolidated financial statements, as well as for the individual financial statements of the other subsidiaries. The audit committee of Rothmans Co has suggested to keep the fees as low as possible, therefore they decided that your firm, Deal & Co audit the companies in this country and those foreign subsidiaries will be audited by local firms in those countries. The parent company has recently been involved with a new business in Tarland , a remote country which produces tropical vegetables. The business is said to be not incorporated as a company and the local regulating authorities in Tarland only require financial statements to be prepared or audited when they are incorporated. You have also obtained the following regarding the company, from internet: Protests Grand Co, one of the subsidiaries of the parent company has been accused of environmental damage, as a result of its operations impacting and causing harm on the wildlife. There has been a protest by the lobbies of wildlife concerned citizens. The recordings of the protests have spread the entire world wide. Operational Expansion It was noted that the parent company expanded its operations in a particular country through acquiring a large piece of land so as to grow wheat. To be approved by the government, a significant "incentive payment" was made to a government minister of lands in that particular country. This was also reported widely on the international media. Q P - A S R - 0 0 1 | R e v 0 0 0 E f f D a t e : 1 7 - 0 5 - 2 0 2 1 Page 6 of 6 Required: Using the information from the case above as well as your general knowledge, explain TEN matters which should be considered before your firm Deal & Co accepts the audit of Rothmans Co.