Skip to content

ACCA Strategic Professional · Advanced Audit and Assurance (International) · Professional appointments

Marlowe LLP is considering accepting appointment as auditor of Tidewater Ltd. Before accepting, Marlowe's partner learns that Tidewater's previous auditor resigned after a dispute about revenue recognition. What should Marlowe do first under the IESBA Code?

Marlowe should, with Tidewater's permission, contact the outgoing auditor to ask whether there are professional reasons not to accept the appointment. This helps evaluate threats before acceptance. Accepting first or relying on a director's assertion does not allow Marlowe to properly assess the disagreement about revenue recognition.

  1. ACommunicate with the existing auditor, with the client's permission, to ask about any professional reasons the appointment should not be acceptedCorrect
  2. BAccept the appointment and review the revenue policy during the first audit
  3. CRefuse to communicate with the predecessor, as this would breach the client's confidentiality in all cases
  4. DAsk the client's directors to confirm in writing that no disagreement existed

Explanation

The proposed auditor should ask the client's permission to contact the existing auditor, and if permission is refused should consider whether to accept. Contact lets Marlowe learn of any ethical or professional matters. Accepting first removes the chance to evaluate the threat, and confidentiality is addressed by obtaining consent rather than avoiding contact.

Did you get it right without looking?

One question tells you little. A timed set on Professional appointments shows your real accuracy, how long you take and where you lose marks.

Practise Professional appointmentsFree diagnostic mock

More Professional appointments questions