You are an audit manager in Princewill & Co, a firm of Chartered Accountants which offers a range of assurance services. You are responsible for the audit of Vestry Ltd, a company which provides approximately 10% of your firm's practice income each year. The finance director of Vestry Ltd has recently contacted you to provide information about another company, Soludo Ltd, which is looking to appoint a provider of assurance services. An extract from the email which the finance director of Vestry Ltd has sent to you is shown below: 'One of my friends, Gabriel Papa is the managing director of Soludo Ltd, a small company, with annual revenue of around £8 million, which is looking to expand in the next few years. I know that Gabriel Papa has approached the company's bank for finance of £6 million to fund the expansion. To support this loan application, Gabriel Papa needs to appoint a firm to provide a limited assurance review on the company's financial statements. He would also want the appointed firm to provide tax planning advice and to prepare both the company's and his personal tax computations for submission to Inland Revenue. I have asked Gabriel Papa to contact you, and I hope that Princewill & Co will be able to provide these services to Soludo Ltd for a low fee. If the fce you suggest is too high, and unacceptable to Gabriel Papa, then I will recommend that Gabriel Papa approaches Gullible & Co instead, and I would also consider appointing Gullible & Co to provide the audit of Vestry Ltd. Gullible & Co is a firm of Chartered Accountants which has an office in the same town as Princewill & Co. You have done some research on both Soludo Ltd and Gabriel Papa and have confirmed that the company is owner-managed, with the Gabriel Papa family owning 90% of the share capital. Gabriel Papa is a director and majority shareholder of three other companies. An article in a newspaper from several years ago about Gabriel Papa indicated that one of his companies was once fined for breach of employment law and that he had used money from one of the company's pension plans to set up a business abroad, appointing his son as the managing director of that business. Required: In relation to Princewill & Co's potential acceptance of Soludo Ltd as a client of the firm; Explain the importance of performing know your client procedures.