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CS Professional · Internal and Forensic Audit · Internal Audit Engagements and Planning

Mehta & Rao LLP, a firm of chartered accountants, is invited by Kaveri Textiles Ltd to take over as its statutory auditor from another firm. Under SA 300, which activity must the new auditor undertake before starting this initial audit?

Before an initial audit begins, the auditor must perform the SA 220 procedures on accepting the client relationship and the specific engagement, and must communicate with the predecessor auditor where there has been a change of auditors, following relevant ethical requirements.

  1. APerform the SA 220 procedures on acceptance of the client relationship and the specific engagement, and communicate with the predecessor auditor in compliance with relevant ethical requirementsCorrect
  2. BSkip any contact with the predecessor auditor because the appointment is by shareholders
  3. CRely entirely on the internal audit function's report to decide on acceptance
  4. DFinalise the overall audit strategy only after the first audit evidence is collected

Explanation

SA 300 requires the auditor, before starting an initial audit, to perform the SA 220 acceptance procedures and to communicate with the predecessor auditor where auditors have changed, in compliance with relevant ethical requirements. The other options contradict these requirements.

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