ACCA Strategic Professional · Advanced Audit and Assurance (International) · Professional appointments
Harlow & Co is asked to tender for the audit of Brightwell Ltd, a new client. Before accepting the appointment, which action is the firm required to take first in line with the IESBA Code?
The firm should first obtain the client's permission to contact the existing auditor and then communicate with that auditor to ask about any professional reasons for not accepting the appointment. This helps the new firm identify ethical or legal issues before it commits to the engagement.
- ARequest the client's permission to communicate with the existing auditor, and then write to the existing auditor to ask about any professional reasons why the appointment should not be acceptedCorrect
- BBegin planning the audit and issue the engagement letter so that the fieldwork team can start before the year end
- CAsk the client's directors to confirm in writing that they will not dispute the audit fee
- DReview the client's most recent financial statements and sign the engagement letter on behalf of the directors
Explanation
The IESBA Code requires a proposed auditor to ask the client for permission to contact the existing auditor, and then to enquire whether there are professional reasons why the appointment should not be accepted. Without that communication, the firm cannot properly judge ethical risks. Starting work or issuing an engagement letter before this is premature, and fee assurances do not address acceptance risks.
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