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

CA Deshmukh is approached by Zenith Ltd to become its auditor in place of CA Pillai, who resigned citing professional reasons which he sent in writing to the Board with a copy to the Institute. What must CA Deshmukh do before accepting the appointment?

CA Deshmukh 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 duty is obligatory for the incoming auditor, and it applies before acceptance, not after.

  1. AObtain a copy of the communication from the Board of Directors and consider it before acceptingCorrect
  2. BAccept the appointment, then review the communication within 30 days
  3. CRely on the company's oral explanation of the resignation
  4. DSeek approval of the Ethical Standards Board before accepting

Explanation

Under the guidelines on removal and resignation, where an auditor resigns and communicates professional reasons to the Board, it is obligatory on the incoming auditor, before accepting the appointment, to obtain a copy of that communication from the Board and consider it. Option D is wrong because the Board only reviews communications and calls for information when needed; it does not approve acceptance.

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