Communications Between Predecessor and Successor Auditors Essay Example
The predecessor should respond promptly and completely to the inquiries noted above. I will continue audit services for the company, which will involve a series of steps. Does a reauditor have to redo confirmation and inventory observations? Here is an example consent letter and an acknowledgement letter from predecessor accountant to its former client. Consider advising the prospective client in advance that the reauditor may find material misstatements the predecessor did not previously identify. I do know that there is almost always wiggle room on invoices, but since you're now a former client I would probably bill you 100% for the time we spent and refuse further cooperation if you didn't pay. Before permitting access to the working papers, the predecessor auditor may wish to obtain a written communication from the successor auditor regarding the use of the working papers. Consider advising the prospective client in advance that the reauditor may find material misstatements the predecessor did not previously identify.
The predecessor auditor may wish to request a consent and acknowledgment letter from the client to document this authorization in an effort to reduce misunderstandings about the scope of the communications being authorized. In your answer address why successor auditors are supposed to contact predecessor auditors, and what a limited response should mean to them. Firm policy will dictate whether or not documentation will be required. Depends on how much the client needs the work done and what it's for. The reauditor must obtain evidence of opening balances for the financial statements being audited as well as how consistently the company applied accounting principles.
Footnote renumbered by the issuance of Statement on Auditing Standards No. If the company processes significant amounts of information electronically, and no other documentation of those transactions exists, the potential reauditor should make certain it can gather sufficient audit evidence for material assertions. If client management has changed, the potential reauditor should see if the current management is willing—and has sufficient knowledge—to provide required management representations at the end of the reaudit. We do not provide any workpapers or anything from our audit file. This section applies whenever an independent auditor is considering accepting an engagement to audit or reaudit see paragraph.
After the meeting, I will finalize the audit plan before beginning. The predecessor auditor may wish to request a consent and acknowledgment letter from the client to document this authorization in an effort to reduce misunderstandings about the scope of the communications being authorized. However, the standard says communications may be either written or oral and includes examples of a client consent and acknowledgment letter and a successor auditor acknowledgment letter. The new statement incorporates this guidance. Minkow, had previously been involved in credit card fraud. An audit in accordance with generally accepted auditing standards normally includes audit procedures specifically designed to detect illegal acts that have an indirect but material effect on the financial statements.
We have never verified the credentials of any user. Please seek appropriate professional advice for tax-related matters. See section 543, Part of Audit Performed by Other Independent Auditors, paragraph 10 a. Audit evidence may include the predecessors audit report and the related financial statements, the results of the predecessors inquiry, the audit procedures performed on the current periods transactions and the audit procedures performed on account balances at the beginning of the period under audit and on transactions in prior periods. Disagreements with management as to accounting principles, auditing procedures, or other similarly significant matters. Effective with respect to acceptance of an engagement after March 31, 1998, unless otherwise indicated.
They can also help the potential reauditor determine if it should accept the engagement. Do not post your own blog, website, or video channel. Which of the following would an auditor most likely use in determining overall materiality when planning the audit? The reauditor should ask the client to authorize the predecessor to provide documentation for the period in question, as well as for prior periods. You consent to our cookies if you continue to use our website. Is that considered a scope limit grounds for a disclaimer of opinion , or would the new auditor just refuse to take the engagement and withdraw completely? Making inquiries of the predecessor auditors. Andrew Clarkson is called predecessor and Lie Dharma Putra is successor accountant.
If the successor auditor receives a limited response, its implications should be considered in deciding whether to accept the engagement. The predecessor auditor just sent us a bill for 8 hours of work to prepare the workpapers. As generally conceived, the audit committee of a publicly held company should be made up of A. Plus, the audit fees on this type of work are generally the cheapest bill compared to the i-bankers and lawyers. We make no representation as to the sufficiency or appropriateness of the information in our working papers for your purposes. And what's up with old work papers: is the new auditor even allowed to look at those? This section applies whenever an independent auditor is considering accepting an engagement to audit or reaudit see paragraph.
In my case, the partner and myself were asked questions about the work, participated in calls and such, so we billed a bit extra. Analysis of income statement accounts. The predecessor also can limit or deny the successor access to the working papers. Determine if the potential reauditor will be able to obtain necessary audit evidence in significant areas such as inventory and revenue. Express an opinion only on the current year's financial statements and make no reference to the prior year's statements.
Could some of you with audit experience enlighten me with what's normal. The predecessor auditor may wish to request a consent and acknowledgment letter from the client to document this authorization in an effort to reduce misunderstandings about the scope of the communications being authorized. This type of information would help the successor auditor access the overall integrity of the potential client. If the prospective client prohibits the predecessor from responding to the successor, the successor should ask the prospective client why and then should consider the implications of that refusal in deciding whether to accept the engagement. The predecessor firm might not be able to fully respond because it no longer employs key members of the original audit team.
