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

CA Nisha is approached to replace the outgoing auditor of Sundaram Foods Ltd. The outgoing auditor did not offer himself for re-appointment and sent the Board a written communication giving professional reasons for it, with a copy to the Institute. What is Nisha's obligation under the Code of Ethics guidelines?

Nisha must obtain a copy of the outgoing auditor's communication from the Board of Directors and consider it before accepting the appointment. The guidelines make this obligatory on the incoming auditor and tie it to the timing of acceptance, not afterwards.

  1. AAccept the appointment first and review the communication within the first quarter
  2. BObtain a copy of that communication from the Board of Directors and consider it before accepting the appointmentCorrect
  3. CAsk the Institute to approve her appointment before she accepts
  4. DShe has no obligation, as the communication is only between the outgoing auditor and the Board

Explanation

The guidelines make it obligatory on the incoming auditor, before accepting the appointment, to obtain a copy of the communication from the Board and consider it. Option A reverses the required order.

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