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

CA Mehta is approached to replace CA Nair as auditor of Sahyadri Foods Ltd, a company. Nair resigned and sent the company's Board a written communication stating professional reasons for his resignation, with a copy to ICAI. Before accepting the appointment, what is Mehta obliged to do under the ICAI guidelines on removal and resignation of auditors?

Mehta must obtain a copy of Nair's written communication from the company's Board of Directors and consider it before accepting the appointment. This is obligatory for the incoming auditor under the ICAI guidelines. Reviewing it after acceptance, or relying on oral assurances, does not satisfy the requirement.

  1. AObtain a copy of Nair's communication from the Board and consider it before acceptingCorrect
  2. BAccept first and then review the communication within 30 days
  3. CRely on oral assurance from the promoters that nothing is wrong
  4. DSeek ESB approval before accepting the appointment

Explanation

The guidelines state it is obligatory on the incoming auditor, before accepting appointment, to obtain a copy of the outgoing auditor's communication from the Board and consider it. Accepting first and reviewing later reverses the required sequence. The text does not require prior ESB approval, which only reviews the communications and may call for information.

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