1. In deciding whether to accept this engagement, what factors should Block consider?

- Block must consider the performance of the previous auditor such as the

disagreements that haven’t resolve due to the its choice and how these affect the

financial statements.

- Block must also consider the management compliance to the ethical standards and

if the unresolved disagreements shows lack of management ethics.

- Block consider as well his ability to execute the audit properly and his knowledge

of the engagement’s terms.

These are referred to in PSA 300 and these factors are must consider for it is easy

to perform the audit.

2. If he decides to accept the engagement, in what areas should he concentrate his

audit resources?

- Block should focus on cost allocating for the mall project that has not yet been

completed. It's possible that operating expenses were incorrectly assigned to the

project and recorded as assets.

- Block should also focus on sufficiency of the uncollectible lease rentals provision.

- If revenues from transactions with lessees were erroneously recognized.

Block concentrate in this areas, hence, unaudited earnings increase, then sales

may have been overstated or costs may have been understated