CS Professional · Compliance Management, Audit and Due Diligence · Audit Engagement

Mehta Associates audits Ganga Foods Ltd. every year. In April, shortly after completing the previous audit, the firm reviews whether it remains independent and whether to continue with the client. A junior argues that independence need only be checked once, at first appointment. Which view is consistent with SA 300?

The junior is wrong. SA 300 says client continuance and ethical requirements, including independence, are considered throughout the engagement as circumstances change, and for continuing engagements the initial procedures often take place shortly after the previous audit is completed. Independence is not a one-time test at first appointment.

1. AThe junior is right, because independence is assessed only at first acceptance
2. BThe junior is right, because continuing engagements are exempt from ethical evaluation
3. CThe junior is wrong, because independence is checked only at the signing of the audit report
4. DThe junior is wrong, because consideration of client continuance and ethical requirements, including independence, occurs throughout the engagement as circumstances change, with initial procedures often done shortly after the previous auditCorrect