Question

The audit committee of the board of directors of Rebel Corporation asked Tish & Field, CPAs,...

The audit committee of the board of directors of Rebel Corporation asked Tish & Field, CPAs, to audit Rebel's financial statements for the year ended December 31, 2018. Tish & Field explained the need to make an inquiry of the predecessor auditor and requested permission to do so. Rebel's management agreed and authorized the predecessor auditor to respond fully to Tish & Field's inquiries.

Required:

a. What information should Tish & Field obtain during its inquiry of the predecessor auditor prior to accepting the engagement?

b. What additional audit procedures should Tish & Field perform in evaluating Rebel as a potential client?

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Answer #2

a)

during its inquiry thr following pints should be verified with predesessor auditor.

  1. cooperation from the management.
  2. indepence of internal control system..
  3. evidence obtained from top management.
  4. audit procedures performed by the previous auditor.
  5. conclusions he reached.
  6. finding of any misstatements.

b)

overall understanding of the clients business is very important aspect of conducting an audit.  

the auditor shoud be aware of the following

  1. size and nature of the business.
  2. volume of transactions and ppayment method.
  3. internal control system and its potentiality.
  4. management suport.
  5. external evidence has to be obtaines.
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