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

CA Nisha is invited to be the incoming auditor of Orion Components Ltd. The previous auditor was not reappointed though he was willing, and he filed with the Institute a copy of his statement sent to the company for circulation among shareholders. What must Nisha do before accepting the appointment?

Nisha must obtain a copy of the outgoing auditor's statement from the company and consider it before accepting the appointment. The guidelines make this obligatory for the incoming auditor, and it must occur before acceptance, not afterwards.

  1. ANothing further, since the Institute already holds the statement
  2. BObtain a copy of that communication from the company and consider it before acceptingCorrect
  3. CObtain it only after accepting, for the first audit report
  4. DAsk the Ethical Standards Board for permission to accept

Explanation

The guidelines state it is obligatory on the incoming auditor, before accepting the appointment, to obtain a copy of the communication from the company and consider it. Obtaining it after acceptance defeats the purpose, and no permission from the Board is required.

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