CLIENT ACCEPTANCE EVALUATION QUESTIONNAIRE FOR NON ATTEST SERVICES Appendix – A

Sign-off: Initials Date

Client name: National Construction Limited Prepared:
Reviewed:
Partner:
Period end:
EQCR:

This form is to document the acceptance process of a prospective client for non-attest services. Engagement
Partner / Lead Assignment Partner or Functional Leader or his designated Partner, as applicable should approve
the acceptance of a new client.

A yes answer indicates a possible issue for consideration on acceptance of prospective client.

All “Yes” answers should be explained in the Comment area of this form. Information should be documented in
sections marked with “-“.

The Client Acceptance Evaluation Process evaluates:

1. Integrity and reputation of the Prospective Client (“Client”)
2. Financial and business stability of the Client
3. Consideration and Evaluation of the Proposed Engagement
4. Our assessment of Engagement Risk

The Client Acceptance Evaluation Form documents the minimum procedures that should be undertaken in
the Client Acceptance Evaluation Process. The Client Acceptance Evaluation Form should be approved
/submitted for approval by the Engagement Partner / Lead Assignment Partner together with all relevant
memoranda, analyses and documentation supporting the acceptance recommendation. Note that only one
Client Acceptance Evaluation Form need be completed for a group of companies.

A. General

Y or
No. Procedure N or Comment and/or Ref.
N/a
Prospective Clients (Name) National Construction Limited
1. Y
Year End
2. Source of Referral N
The NCL is a public unlisted company. It’s
more than 87% shares are owned by the Government
of Pakistan through Ministry of Housing and
Works. NCL undertakes project of classified nature,
Briefly describe the nature of business ranging from construction of roads and buildings to
3. (e.g. industry, products or services, major Y development of housing schemes. Beside executing
customers, major supplier) strategic projects on its own, NCL also undertakes
other construction projects
in partnership with private construction companies
under Joint Venture /consortium or associate
structure.
4. Indicate the amount of any written or - Not applicable
verbal quotes provided to the prospective
client? Please document any initial quotes
 CLIENT ACCEPTANCE EVALUATION QUESTIONNAIRE FOR NON ATTEST SERVICES Appendix – A

Y or
No. Procedure N or Comment and/or Ref.
N/a
provided.
5. Nature of services to be provided: Y Business Advisory Services.
Was the business started within the past
6. N
five years?
If Yes to Question 6 then, Indicate year: N/A
Does the prospective client have publicly
7. N
traded debt or equity securities?
Is the prospective client considering
8. "going public" in the next few years or N
intending to sell the business?
9. Please list directors, major shareholders Name: Ministry of Housing and Works Islamabad
and officers: Shareholder:
y % Held: 87.45%
Active in Business: Y
Other Business Interests:
Name: Engr. Athar Nawaz Malik
Director: Deputy Chief operating Officer
-
Active in Business: Y
Other Business Interests:
The BOD comprises of representatives from the
Ministry of Housing and Works, Pak PWD and
-
Ministry of Finance as well as representatives from
NBP, NIT and NCL Employees Empowerment Trust.

How many members of the Board of

Directors or equivalent are independent
10 outside directors? (Specify the total N/A
number of board members vs. the number
that are independent outside members).
Obtain an understanding of the client's
business and operations through the
11. following: Y
(please check all that apply). If Yes,
explain.
 If Yes to Question 7
Read Annual reports of year 2017 to year 2019 to
 Annual reports Y obtain an understanding of the client’s business and
operations.
Studied Financial statements of year 2017 to year
 Financial Statements Y 2019 to obtain an understanding of the client’s
business and operations.
 Income tax returns
 News/Media
To Search about the types of projects NCL is into and
 Internet Y
construction sector in Pakistan.
 If Yes to Question 7, Registration
 CLIENT ACCEPTANCE EVALUATION QUESTIONNAIRE FOR NON ATTEST SERVICES Appendix – A

Y or
No. Procedure N or Comment and/or Ref.
N/a
Statements
 If Yes to Question 7, Forms 10-K (for
U.S. filing companies)
 Other reports to regulatory agencies
 Other

B. Entity

Y or
No. Procedure N or Comment and/or Ref.
N/a
Do the operations of the entity exhibit
12. N
higher than normal risk?
If Yes to Question 13 then, please check
13.
all that apply
 New and unproven products N/A
 Limited number of customers and N/A
suppliers
 Emerging or maturing industry N/A
 Unpredictable changes in price N/A
 Unpredictable changes in availability N/A
of product inputs
 Vulnerable to rapidly changing N/A
technology
 Investing cash in long-term assets N/A
from short-term borrowings
 Prone to high number of lawsuits N/A
 Company is in the development stage N/A
 High cyclical business N/A
 High cyclical industry N/A
 Audit requires reliance on industry N/A
specialists
 Industry regulations impact on N/A
industry-wide profitability
 Volatile industry (consider N/A
competition, market saturation,
product obsolescence, declining
product demand, rapid changes, high
operating leverage i.e. high fixed costs
and low variable costs)
 Other. N/A
Are there any major issues with regard to
14. the financial results of the prospective N
client which raises a level of concern.
If Yes to Question 14 then, please check
all that apply.
 CLIENT ACCEPTANCE EVALUATION QUESTIONNAIRE FOR NON ATTEST SERVICES Appendix – A

Y or
No. Procedure N or Comment and/or Ref.
N/a
 Operating losses N/A
 Problem contracts and issues N/A
 Pension payments N/A
 Commitments and contingencies N/A
 Other
Does the approval of Functional Leader or
15.
his designated partner required due to:
 The prospective client is the subject of
N/A
a non routine regulatory investigation
 There is evidence of client imposed
limitation on the scope of the prior
year or previous engagement, or a
N/A
desire by the prospective client to limit
the scope of this year’s or the current
engagement.
 Engagement fee is in excess of Rs. 1
N
million
C. Management (Note: Management includes CEO/CFO)
Y or
No. Procedure N or Comment and/or Ref.
N/a
Obtain an understanding of the potential
client's reputation (including
management's reputation), through the N/A
16.
following (indicate who was consulted i.e.
contact name, company name, address,
phone number):
 Bankers N/A
 Legal Counsel N/A
 Underwriters N/A
 Investigative Firms N/A
 News/Media N/A
 Internet N/A
 Others in the Business Community N/A
 Other (specify) N/A
Have you been made aware of any
17. information from referral sources or other -
contacts that indicate:
Management is prone to engaging in
speculative ventures or accepting N
unusually high business risks?
Management has not been receptive to N
or has rejected implementing
recommendations made to improve
internal controls which have been
suggested by the current, previous,
 CLIENT ACCEPTANCE EVALUATION QUESTIONNAIRE FOR NON ATTEST SERVICES Appendix – A

Y or
No. Procedure N or Comment and/or Ref.
N/a
and/or internal auditors/accountants?

D. Independence

Y or
No. Procedure N or Comment and/or Ref.
N/a
Complete the Independence Questionnaire
220.MPQ if we accept this client. In the
18. -
meantime, address the following
questions:
Do any relationships exist with the
19. potential client that would impair or N/A
perceive to impair our independence?
Would acceptance of the engagement
20. create any conflicts of interests in the N/A
Firm?
Does any information regarding the
potential client and the scope of services
21. provided to them by other departments or N/A
network firms create threats to
independence?
Is the prospective engagement partner
aware of any matters connected to the
ethics of the profession and the Firm as to
why we should not accept this prospective
22. N/A
client or why such acceptance needs to be
considered by an Engagement Quality
Control Reviewer and/or the Head of
Professional Standards?
Is the prospective engagement partner
aware of any matters connected to staffing
and fees that would indicate that we
should not accept this client or why such
23. N/A
acceptance needs to be considered by an
Engagement Quality Control Reviewer
and/or the Head of Professional
Standards?
Are there any problems over adequately
staffing the audit with staff of suitable
24. experience (including industry specialists N/A
and engagement quality control reviewer
as required)?
 CLIENT ACCEPTANCE EVALUATION QUESTIONNAIRE FOR NON ATTEST SERVICES Appendix – A

Y or
No. Procedure N or Comment and/or Ref.
N/a
Have you been made aware of any
information from referral sources or other
contacts that indicate the following parties
25. engage in activities indicative of a lack of N/A
integrity or professionalism that would
indicate that we should not accept this
prospective client:
 Management
 Board of Directors
 Audit Committee members
E. Fraud, Illegal Acts and Money Laundering

Y or
No. Procedure N or Comment and/or Ref.
N/a
Are there any indicators that the
26. prospective client may have performed N
fraud or illegal acts?
Does the prospective client operate in an Client operate as a government organisation and it is
27. industry or sector which has an exposure Y exposed to risk of fraud and illegal acts.
to fraud or illegal acts?
Is there any indication of money
laundering activities or does the
28. prospective client operates in an industry N
which has an exposure to money
laundering?
Is the prospective engagement partner
aware of any matters connected to fraud,
29. illegal acts and money laundering that N
would indicate that we should not accept
this client.

F. Preconditions for non-attest services

I) Nature of engagement

Y or
No. Procedure Nr Description of Engagement
N/a
30. What is the nature of the engagement;
 Internal Audit Services
 Network Security Services
 Systems Implementation
 Forensic, Dispute Consulting, or
Expert Testimony Services
 Investigating and Documenting
 CLIENT ACCEPTANCE EVALUATION QUESTIONNAIRE FOR NON ATTEST SERVICES Appendix – A

Y or
No. Procedure Nr Description of Engagement
N/a
Compliance with Laws and
Regulations (e.g., anti-money
laundering)
 Financial Advisory Services (FAS) / Business plan Services
Corporate Finance, Buy-Sell Y
Advisory, or Capital Raising Services
 FAS / Transaction, Due Diligence,
Reporting Accountant Services
 FAS / Reorganization Advisory,
Bankruptcy, Liquidation Services
 FAS / Forensic, Dispute Consulting,
or Expert Testimony Services
 FAS / Valuation Services
 FAS / Valuation Services related
Corporate Finance, Buy-Sell
Advisory, Capital Raising, M&A
Transactions, Due Diligence,
Reorganization Advisory, Forensic,
and Dispute Consulting Services.
 Consulting / Enterprise Applications
 Consulting / Human Capital, Actuarial
Services
 Consulting / Integrated Service
Offerings
 Consulting of FAS type Services (see
FAS above)
 Consulting / Outsourcing Services
 Consulting / Strategy & Operations
Services
 Consulting / The Value Initiative
 Consulting / Technology Integration
Services

II) Personal Security Risk

Y or
No. Procedure N or Comment and/or Ref.
N/a
Indicate the locations where Firm
31. personnel will be executing the Proposed N/A
Engagement
Do any of these location(s) pose any N/A
32.
personal security risks to Firm personnel?
If “yes”, has adequate safeguards been
33.
ensured?
 CLIENT ACCEPTANCE EVALUATION QUESTIONNAIRE FOR NON ATTEST SERVICES Appendix – A

III) Determine if the Client is an Existing Client of another office of the Firm and the Status of Client Acceptance
(or Continuance) Documentation:
Y or
No. Procedure N or Comment and/or Ref.
N/a
Existing Client of another local / N
34.
International office of the Firm?
If “yes” to (34), has the other office
performed Client Acceptance (or Client
35.
Continuance) consistent with the
procedures used by the Firm?
Is there a counter party in the Proposed N
36.
Engagement?
If “yes” to (36) , have you verified that (i)
a Potential Conflict Check has been
37. performed by that other office (ii) the
Potential Conflict Check has been updated
for changes, if any, in the past 12 months?
IV) Engagement Economics Analysis
Y or
No. Procedure N or Comment and/or Ref.
N/a
38. Expected duration of Engagement Y 3-4 Weeks
Do we have any concerns about our
ability to perform this engagement? N
39. (including considerations of resource
availability, deep expertise in industry,
timing of engagement execution)
Will resources of other offices of the N
40.
Firms be required / used?
41. Will third party sub-contractors be used? N

No. Procedure Rupees Comment and/or Ref.

Engagement Economics, Estimated Fee

42.
and Recovery:
Total professional fee, exclusive of 300,000 (PKR)
unrecovered out-of-pocket expenses, Y
proposed to client
Fee attributable to other office of the N/A
Firms
Fee attributable to 3rd party sub- N/A
contractors
Unrecovered out-of-pocket expenses N/A
Net fee attributable to office of the 300,000 (PKR)
Engagement Partner or Lead Y
Assignment Partner
Recovery percentage (based on N/A
 CLIENT ACCEPTANCE EVALUATION QUESTIONNAIRE FOR NON ATTEST SERVICES Appendix – A

No. Procedure Rupees Comment and/or Ref.

standard rates)
Professional service hours N/A
Net fee per profession service hour N/A

V) Internal Audit Engagements

Procedure Y or N
No. Comment and/or Ref.
or N/a
Who are the existing independent N/A
43.
auditors?
Any unusual qualifications, explanatory N/A
44. information in the independent auditors’
report?
45. Will a written report be issued? N/A
46. Will an assurance opinion be issued? N/A
If non-assurance opinion is to be issued, N/A
47. what is the nature of opinion? (if
applicable)
48. Engagement risks identified to date N/A

VI) Transactions, including Merger and Acquisition, Transfers of Interests, IPOs,

Capital-raising, and Litigation Support Engagements

Y or
No. Procedure N or Comment and/or Ref.
N/a
Complete this section if the proposed
engagement is related to transactions
involving:
 Any potential transfer of interests
engagement involving two or more
parties (including acquisitions,
disposals, searches, due diligence,
49. N/A
structuring).
 An initial public offering or other
capital raising engagements.
 A dispute, litigation, or testimony.

Update this section whenever new parties

become part of the transaction.
 CLIENT ACCEPTANCE EVALUATION QUESTIONNAIRE FOR NON ATTEST SERVICES Appendix – A

Y or
No. Procedure N or Comment and/or Ref.
N/a
IMPORTANT
Information concerning this transaction
may be price sensitive and accordingly all
recipients of this memorandum are
required:

a) To keep such information strictly

confidential;
b) Not to make use of such
50. information for the purpose of N/A
dealing or causing or procuring
another person to deal in
securities of the Client or other
company(ies) mentioned herein;
and
c) Not without the prior written
permission to deal or cause or
procure another person to deal in
securities of the Client or other
company(ies) mentioned herein.
51. Describe the transaction
Who are the other parties to the
transaction, including, as applicable, other
52. advisors to the Client, sources of capital, N/A
counterparties, advisors to the
counterparties, etc.?
Any other relevant information for an
53. understanding of the proposed N/A
engagement.

VII) Liquidator, Provisional Liquidator, Receiver or Trustee in Bankruptcy,

Trustee under a Deed of Arrangement

Y or
No. Procedure N or Comment and/or Ref.
N/a
Complete this section for proposed
engagements to act as liquidator;
54. provisional liquidator; receiver or trustee N/A
in bankruptcy or trustee under a Deed of
Arrangement.
55. In the previous two years, has Firm N/A
provided to the Client any audit, attest or
assurance services, or, in the case of a
subsequent insolvency appointment, one
or more assignments of such overall
significance or in such circumstance that
 CLIENT ACCEPTANCE EVALUATION QUESTIONNAIRE FOR NON ATTEST SERVICES Appendix – A

Y or
No. Procedure N or Comment and/or Ref.
N/a
objectivity could be or be seen to be
prejudiced?
In the previous two years, has Firm been
appointed to carry out for any companies
controlled by the Client or under common
control, any audit, attest or assurance
56. services, or, in the case of a subsequent N/A
insolvency appointment, one or more
assignments of such overall significance
or in such circumstances that objectivity
could be or be seen to be prejudiced?
In the previous two years, has Firm been
appointed to carry out for director/shadow
director of the Client, any audit, attest or
assurance services, or, in the case of a
57. subsequent insolvency appointment, one N/A
or more assignments of such overall
significance or in such circumstances that
objectivity could be or be seen to be
prejudiced?
Answer the following questions for
58. prospective engagements as liquidator or
provisional liquidator
59. Is the prospective client insolvent? N
In the light of the responses
above, has there been a material N
professional relationship with the
Client?
If “yes” in (a) and "no" in (b) are
we acting or did we act as
receivers of any of the assets of N/A
the Client with the previous two
years?
If “yes” in (c), do we have Court N/A
sanction for our appointment?
If "no" in (a), is the directors'
declaration of solvency likely to N/A
be substantiated by events?
For liquidations, where the Client has
substantial overseas interests, has the Firm N/A
60.
and other relevant office(s) confirmed that
such interests are not audited by the Firm?
For prospective appointments as receiver
or as trustee in bankruptcy or as trustee
under a Deed of Arrangement, in light of N/A
61.
the responses above, has there been a
material professional relationship with the
prospective client?
 CLIENT ACCEPTANCE EVALUATION QUESTIONNAIRE FOR NON ATTEST SERVICES Appendix – A

VIII) Consulting Engagements

Y or
No. Procedure N or Comment and/or Ref.
N/a
Will a computer-based information N/A
62.
system be implemented?
Will this computer-based information N/A
63. system be a transaction processing
system?
Is the scope of the project clearly defined Scope of project was provided by client in TOR.
64. by the client? Y

65. Engagement risks identified to date N/A

G Engagement Risk Assessment

High
No. Procedure or Comment and/or Ref.
Low
Complete the Engagement Risk
Assessment Questionnaire form
210.MPQ.
66. N/A
Based on form 210.MPQ the engagement
risk should be assessed as:

H Recommendation as to Acceptance

Y or
Acceptance Comment and/or Ref.
N
We have obtained the information we
consider necessary in the decision as to
whether to accept the prospective client.
67. N/A
We have consulted on the acceptance
process as considered necessary.
We are satisfied that there are no
prohibitions that would prevent the firm
68. N/A
or any member of the engagement team
from performing this assignment.
Where significant threats to our
independence have been identified,
existing safeguards are in place to
69. eliminate or reduce such threats to an N/A
acceptable level (describe threats and
safeguards adopted to address these
threats in detailed).
 CLIENT ACCEPTANCE EVALUATION QUESTIONNAIRE FOR NON ATTEST SERVICES Appendix – A

Y or
Acceptance Comment and/or Ref.
N
We are not aware of any other factors that
70. would impair our independence or N/A
appearance of independence.
Based upon engagement evaluation
71. considerations noted above we consider N/A
that the prospective client should be:
 Accepted
 Rejected
If rejected then, communicate Non-
acceptance of the client to the Risk
72
Management Partner for risk and quality
control monitoring purposes.

APPROVAL OF CLIENT ACCEPTANCE

I approve / recommend acceptance of this entity as a client of the Firm:

Engagement Partner/Lead Assignment Partner Date

I concur with the acceptance of this entity as a client of Firm:

*Another partner / Second Partner ______________________ Date

Functional Leader or his designee___________________________ Date

**Functional Leader of relevant other Country ____________________

Date

*Note - Where the Engagement Partner / Lead Assignment Partner is also the Functional Leader and the Client Risk
is classified as:
 “Low” approval of another Partner should be obtained
 “High”, approval of another Senior Partner should be obtained.

** In case of International client.

 CLIENT ACCEPTANCE EVALUATION QUESTIONNAIRE FOR NON ATTEST SERVICES Appendix – A

Guidance

Guidance on completion of this MAP is set out below. Relevant supporting information should be attached where
necessary.

This MAP should be completed for all new client acceptances for non-attest services

The auditor’s consideration of client acceptance and relevant ethical requirements, including independence,
continues throughout the audit engagement as conditions and changes in circumstances occur. Performing initial
procedures on both client acceptance and evaluation of relevant ethical requirements (including independence) at
the beginning of the audit engagement means that they are completed prior to the performance of other significant
activities for the engagement.

The client acceptance process may be summarised as follows:

 Obtain an understanding of the prospective client, for example, its:
 Business and industry
 Management
 Accounting and controls routines
 Other relevant background information
 Consider any threats to the auditor’s independence and objectivity connected to accepting the engagement
 Obtain an understanding of the risks connected to accepting the client and the engagement
 Involve a second partner if required; and
 Consider client and risk issues, and the impact on the decision to accept or reject the client.

Guidance for question 13

The following industry sectors have been designated as higher risk:
 Engagements involving systems implementation;
 Any engagement with fees in excess of an amount of Rs. One Million or any other amount to be determined
by the Firm’s Risk Management Partner;
 Any engagements which modify certain General Business Terms and conditions, e.g. absence of Limitation
on Damages;
 Any engagements where the outcome of our work could be involved in litigation or litigation support;
 Non-attest engagements where the results will be used to document compliance with laws and regulations
(e.g., anti-money laundering);
 Contingent fee engagements;
 First time services either for the Partner or the Firm;
 Any engagement where the Firm is using another country’s professional standards;
 Subcontract relationships, with the Firm either as the prime or the subcontractor.