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

CA Mehta is appointed statutory auditor of Kalyani Foods Ltd. in place of the outgoing auditor, CA Joshi. Joshi was willing to continue but was not reappointed, and he filed with the Institute a copy of his statement sent to the company for circulation among shareholders. What must CA Mehta do before accepting the appointment, as per the ICAI guidelines on removal of auditors?

CA Mehta must obtain a copy of CA Joshi's communication from the company and consider it before accepting the appointment. The obligation falls on the incoming auditor and applies before acceptance, not after. The Ethical Standards Board only reviews such communications afterwards and may seek further information.

  1. AObtain a copy of that communication from the company and consider it before accepting the appointmentCorrect
  2. BAccept first and then review the communication within the first quarter
  3. CObtain the communication only from the Institute and ignore any statement from the company
  4. DSeek the Ethical Standards Board's approval before accepting, in every case

Explanation

Where the outgoing auditor, though willing, was not reappointed and filed a statement, it is obligatory on the incoming auditor, before accepting the appointment, to obtain a copy of the communication from the company and consider it. Accepting first, as in option B, breaches the requirement on timing. The Board reviews only afterwards and may call for further information.

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