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CA Final · Advanced Auditing, Assurance and Professional Ethics · Professional Ethics & Liabilities of Auditors

CA Deepa is invited to accept the statutory audit of Orion Textiles Ltd. in place of the outgoing auditor, who resigned citing professional reasons and sent a written communication to the Board with a copy to the Institute. What must Deepa do before accepting?

Deepa must obtain a copy of the outgoing auditor's written communication from the company's Board of Directors and consider it before accepting the appointment. This is obligatory for an incoming auditor, and no prior clearance from the Ethical Standards Board is needed.

  1. AAccept the appointment since the shareholders will approve it
  2. BObtain a copy of the outgoing auditor's communication from the Board and consider it before acceptingCorrect
  3. CWait for the Ethical Standards Board to clear her appointment
  4. DAsk the outgoing auditor to withdraw the communication

Explanation

The guidelines make it obligatory for the incoming auditor to obtain a copy of the communication from the Board of Directors and consider it before accepting. No prior clearance from the Ethical Standards Board is required, which only reviews the communications and may call for information.

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