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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Advertising, tendering, and obtaining professional work and fees

Marlowe LLP has been asked to tender for the audit of Zenith Foods, a prospective client. Before submitting the tender, which action best reflects the firm's quality management and acceptance requirements?

The firm should assess its competence, capabilities, time and resources and its ability to comply with ethical requirements, including independence, and consider client integrity, before accepting. ISQM 1 requires these acceptance judgements to be made before the engagement is accepted, not afterwards.

  1. ASubmit the tender first and perform client acceptance procedures only after winning the appointment
  2. BAssess whether the firm is competent, has the capabilities, time and resources, and can comply with ethical requirements including independence, before accepting the engagementCorrect
  3. CRely entirely on the previous auditor's opinion that the client is acceptable
  4. DDelegate all acceptance decisions to the engagement team's most junior member to avoid bias

Explanation

ISQM 1 requires the firm to obtain information to decide whether to accept or continue a relationship or engagement, including competence, capabilities, resources, ethical compliance and integrity of the client. This must be done before acceptance. Relying on the predecessor or delegating to a junior is inadequate.

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