(b) Issues to be considered when providing services required
Vantage requires an enhanced range of services this year including review and implementation of additional control systems. This service provides the following risks:

Skills necessary
Roberts & Co must check whether they can provide these services. Roberts & Co is only a seven-partner firm and so the company must ensure it has the necessary staff and skills to undertake this work.

Self-review threat
There is a self-review threat. If Roberts & Co is to implement a new system of internal control then they may also be auditing those systems as part of the statutory audit. Roberts & Co must ensure different staff implement and audit the systems. Preferably different departments in the firm should undertake the work. If insufficient staff are available then Roberts & Co must refuse the additional systems work.

Acceptance of non-audit work
There is a possibility that Roberts & Co will be breaching the IESBA International Code of Ethics for Professional Accountants by accepting the work. In West Africa, the provision of non-assurance services to audit clients follows the IESBA Code.
Non-assurance work is generally not prohibited so long as the audit firm can demonstrate through appropriate safeguards that the threats to independence are reduced to an acceptable level. Firms must also be careful not to assume management responsibility.
Vantage has asked Roberts & Co to review and implement a new system of internal control. Designing internal controls is considered a management responsibility by the Code and this could not be performed by Roberts & Co.

Fee income
Acceptance of additional work will result in additional fee income for Roberts & Co. IESBA’s International Code of Ethics for Professional Accountants states that there is a presumed self-interest threat if the amount of fee income derived from one audit client represents a large proportion of the firm’s total fee income.
The rules are more stringent for public interest entities. Currently, this is not an issue as Vantage is not a public interest entity. However, given Vantage’s growth, this will need careful monitoring in the future should Vantage decide to list.

Client growth
Vantage is growing quickly. The company has poor internal controls providing high risk of financial misstatement. Roberts & Co will need to ensure that sufficient staff of appropriate experience are available and that enough time is allocated to the audit to complete all audit procedures.

Internal audit
Client expectations regarding the use of internal audit may be difficult to meet. As a new department, it will take time for the internal auditors to understand the systems at Vantage and produce any useful reports. Expectation of reduced fees will have to be managed carefully and checks made to ensure the auditor does not limit work because of fee pressure.

Association threat
Vantage is producing a new mobile telephone. The legal status of the telephone is currently uncertain; it may be illegal. Roberts & Co need to determine the likelihood that the telephone is illegal. The audit firm may not wish to be associated with a company producing illegal products.

Report on cash flow
The mobile telephone application also requires a report on Vantage’s cash flow forecast. This will be a separate engagement, with risk to Roberts & Co because Vantage may attempt to show an unrealistic cash position in the forecast. Vantage must determine exactly what type of report is required (positive or negative) and ensure they have the time and staff with the necessary skills to provide the service.

Possible going concern issues
It is not clear whether failure to obtain the new mobile telephone licence will result in Vantage no longer being a going concern. Roberts & Co will need to review the cash flow forecasts closely to determine the company’s status in the future.