Evaluate the Client’s Background
5.13 Client Evaluation. The audit firm of F.A. Bloch and Co. has been approached by the following companies who wish to retain Bloch for audit work:
1 Interlewd, an internet company, whose website features explicit images of male nudes and which operates male strip clubs on the west coast of Australia.
2 Dreamtime, a company that operates gambling casino boats off shore and video game machines in major Australian cities.
3 Bernadette, an entertainment company, whose chief executive officer has been investi- gated by the Italian government for taking bribes, violating public securities laws, conspiring to commit bodily harm, and issuing bad checks. The CEO has not been convicted of any of these charges. The board of directors claim that this happened many years ago, and he has since run several companies successfully.
Required :
A. What procedures should F.A. Bloch and Co. use to investigate these potential clients? B. What would F.A. Bloch and Co. consider in determining whether to accept these clients?
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