- 5 Marks
Question
Explain in brief the measures to be taken by incoming Independent Auditors after accepting an appointment and when there is a change in professional appointment.
Answer
- Communication with Previous Auditor:
The incoming auditor should contact the outgoing auditor to obtain information about any issues that arose during their tenure. This communication ensures transparency and helps the new auditor understand any disagreements or other concerns between the client and the previous auditor. It also allows the new auditor to confirm if any ethical issues may impact the appointment. - Review of Engagement Acceptance Procedures:
The incoming auditor must review and document the acceptance process to ensure that all ethical, legal, and professional standards have been met. This includes ensuring there are no conflicts of interest and confirming the auditor’s independence. - Access to Previous Audit Files:
Where appropriate, the incoming auditor should request access to the previous auditor’s working papers. This step helps the new auditor become familiar with the client’s financial and operational background, providing context for the upcoming audit. - Letter of Engagement:
A formal engagement letter should be issued to the client. This document sets out the terms of the audit, including the auditor’s responsibilities, scope of the work, and any other significant matters, ensuring clear communication from the outset. - Compliance with Legal and Professional Requirements:
The incoming auditor must ensure that the change of auditor is in full compliance with applicable laws and regulations. This includes confirming that the previous auditor’s removal or resignation was conducted according to the relevant legal framework, such as providing notice to shareholders or regulatory bodies.
- Topic: The Role and Responsibilities of Auditors
- Series: NOV 2016
- Uploader: Kwame Aikins