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CS Professional · Internal and Forensic Audit · Internal Audit Engagements and Planning

Before starting an initial audit of Kaveri Textiles Ltd, where the company has changed its auditor, the new auditor wants to know which activities SA 300 requires to be undertaken before the initial audit begins. Which of the following correctly states them?

Before an initial audit, the auditor must perform SA 220 procedures on accepting the client relationship and the specific engagement, and must communicate with the predecessor auditor where auditors have changed, complying with ethical requirements. Reviewing predecessor working papers is optional and subject to law.

  1. APerforming SA 220 procedures on acceptance of the client relationship and the specific engagement, and communicating with the predecessor auditor where there has been a change of auditorsCorrect
  2. BIssuing the audit report on opening balances and then communicating with the predecessor auditor after the audit is completed
  3. CObtaining the predecessor auditor's working papers in every case, even where law or regulation prohibits it
  4. DPreparing the final audit programme for all areas and having the management approve it before the engagement is accepted

Explanation

SA 300 requires two activities before an initial audit starts: performing SA 220 procedures for acceptance of the client relationship and the specific engagement, and communicating with the predecessor auditor where there has been a change of auditors, in compliance with ethical requirements. Reviewing predecessor working papers is only a possible additional arrangement, and only unless prohibited by law or regulation.

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