ACCA Strategic Professional · Advanced Audit and Assurance (International) · Advertising, tendering, and obtaining professional work and fees
Delmar & Partners has been approached to tender for the audit of Tessa Foods Ltd. Which action must the firm take first regarding its professional clearance procedures before accepting the appointment?
The firm should obtain the prospective client's permission and then communicate with the existing auditor to ask whether there are professional reasons not to accept the appointment. This clearance step provides independent information on integrity, disputes or ethical issues, and must be completed before accepting, not after.
- ABegin the audit planning immediately and contact the outgoing auditor after the first board meeting
- BObtain the client's permission and then communicate with the existing auditor to enquire whether there are any professional reasons why the appointment should not be acceptedCorrect
- CAsk the client's finance director to confirm there are no ethical reasons to decline
- DReport the approach to the regulator before any contact with the client
Explanation
Before accepting nomination, the proposed auditor should request the client's permission to contact the existing auditor, then ask about any professional reasons for not accepting. This gives information on integrity concerns, disagreements or fee disputes. Option A is wrong because clearance must precede acceptance. Option C relies on the client, not an independent source.
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