Question

True or False

1. Before accepting an engagement, the possible successor auditors should ask the predecessor auditors questions about the integrity of management, disagreements with management, and the reasons for the change in auditors.
2. The successor auditors should obtain permission from the prospective client to contact the predecessor auditors

Answer 1

True.

Reason:

The Successor Auditor should request permission from the client to make an enquiry with the predecessor auditor prior to final acceptance of the engagement.

If the prospective client refuses to permit the predecessor auditor to respond or limits the response, the successor auditor should inquire as to the reasons and consider the implications of that refusal in deciding whether to accept the engagement or not.

The successor auditor should make specific enquiries of the predecessor auditor regarding matters that will assist successor auditor in determining whether to accept the engagement. Matters subject to enquiry includes:

1. Information that might bear on the integrity of the management.

2. Disagreement with Management as to accounting policies, aud8procedures or other significant matters.

3. Predecessor auditor's opinion or understanding as to the reasons for the change in auditors.

Successor auditor may wish to conduct any other enquires.

After conducting the enquiries with the predecessor auditor, if the successor auditor is of the view that undertaking of the engagement might lead him in some difficult circumstances or would bind for an illegal object or fraud then successor auditor has the full authority to reject the engagement.