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

CA Nisha has been approached to accept the statutory audit of Bharat Agro Ltd. The existing auditor, CA Prem, was not reappointed at the AGM though willing. CA Prem sent a statement to the management for circulation among shareholders and filed a copy with the Institute. What must CA Nisha do before accepting the appointment?

CA Nisha must obtain a copy of CA Prem's communication from the company and consider it before accepting the appointment. The guidelines make this obligatory for the incoming auditor where a willing auditor has not been reappointed, so that she can assess the professional reasons involved.

  1. ANothing, as it is the Institute's job to review such statements
  2. BObtain a copy of that communication from the company and consider it before accepting the appointmentCorrect
  3. CObtain it only after accepting the appointment to avoid delay
  4. DSeek CA Prem's client records directly without company or client permission

Explanation

Per the guidelines on removal of auditors, where an auditor willing for reappointment is not reappointed, it is obligatory on the incoming auditor, before accepting the appointment, to obtain a copy of the communication from the company and consider it. Doing it after acceptance defeats the purpose.

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