Question

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.

Answer 1

The required communications include specific and reasonable inquiries of the predecessor regarding matters that will help the successor decide whether to accept an engagement. A successor cannot accept an engagement until he or she has communicated with the predecessor and evaluated the responses. Required communications include matters relating to;

• 1)Information that might bear on the integrity of management.
• 2)Disagreements with management as to accounting principles, auditing procedures or other significant matters.
• 3)Communications to audit committees or others with equivalent authority and responsibility regarding fraud, illegal acts by clients and internal control related matters.
• 4)The predecessor auditors understanding about the reasons for the change of auditors.