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CA Final · Advanced Auditing, Assurance and Professional Ethics · Professional Ethics & Liabilities of Auditors

Narmada Infra Ltd's auditor, CA Joshi, was willing to continue but the general meeting did not reappoint him. Joshi sent the management a statement for circulation among shareholders. A new auditor, CA Kulkarni, is proposed. Which set of actions is correct under the ICAI guidelines?

Joshi must file with ICAI a copy of the statement he sent to management for circulation to shareholders, and Kulkarni must obtain a copy from the company and consider it before accepting the appointment. The Ethical Standards Board may later review it, but that does not relieve the incoming auditor.

  1. AJoshi files a copy of his statement with ICAI; Kulkarni obtains a copy from the company and considers it before acceptingCorrect
  2. BJoshi need not file anything; Kulkarni may accept at once
  3. CJoshi files with ICAI; Kulkarni needs no copy as ESB will handle it
  4. DKulkarni obtains the statement from ICAI only after accepting the appointment

Explanation

Where an auditor, though willing for reappointment, has not been reappointed, he shall file with the Institute a copy of the statement sent to management for circulation among shareholders. The incoming auditor must obtain a copy from the company and consider it before accepting. ESB review is a later step and does not replace Kulkarni's duty.

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