Tutorial 3: Solutions
4-20
a. (1)
b. (2)
c. (1)
6-3
The new auditor (successor) may find it necessary to communicate with the
preceding auditor to determine whether there are any reasons for not accepting the
engagement (see the Code of Ethics for Professional Accountants APES 110, Section 210
(‘Professional Appointment’), para. 11). For example, if the client has a history of problems
that suggest its senior management lacks integrity or has been engaged in disputes over
accounting or legal issues, it may be a high-risk client and the audit firm might decide not
to accept the appointment. Permission must be obtained from the client before
communication can be made because of the confidentiality requirement of professional
standards. The predecessor is required to respond to the successor’s request for
information; however, the response may be limited to stating that no information will be
given. The successor auditor should be wary if the predecessor is reluctant to provide
information about the client.