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In: Accounting

Required Communications Between Predecessor and Successor Auditors What are the required communications between predecessor and successor...

Required Communications Between Predecessor and Successor Auditors

What are the required communications between predecessor and successor auditors, as outlined by SAS No. 84?

Solutions

Expert Solution

SAS No. 84 states that every sucessor auditor should before accepting the new engagement as a auditor is required to send a written communication letter to the predecessor auditor stating the additional inquiries and other relevant matters.

Here, predecessor auditor means the auditor who has perform the most recent audit of the client but did not complete it or the auditor who has refused to be reappointed or terminated by the company.

And Sucessor auditor is the auditor who is considering the acceptance of the engagement.

The purpose of the communication between predecessor and sucessor auditor is to find :

- reason of change of the predecessor auditor and

- Inquiry about the following:

-Information about integrity of management.

- If there is any disagreement with management with regard to accounting principles, auditing procedures etc.

- Deficiencies with internal control

- Any other resonable inquiry.

Sucessor auditor can also communicate to the predecessor auditor for granting permission of reviewing of his working papers to gain understanding of his work.


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