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

Rao & Associates have been appointed to replace the outgoing auditor of Sundaram Foods Ltd. The partner proposes to start fieldwork immediately and decide later whether to contact the previous auditor. Under SA 300, what is the correct position?

Where there has been a change of auditors, the incoming auditor must communicate with the predecessor auditor, in compliance with relevant ethical requirements, before starting the initial audit. It is a pre-commencement requirement, not optional, not restricted to misconduct cases and not postponed to the reporting stage.

  1. ACommunication with the predecessor auditor is required only if the previous auditor was removed for misconduct
  2. BCommunication with the predecessor auditor, in compliance with relevant ethical requirements, must be undertaken before starting the initial audit where there has been a change of auditorsCorrect
  3. CCommunication with the predecessor auditor is optional and may be done after issuing the report
  4. DCommunication is needed only with the management, as the predecessor has no role after resignation

Explanation

SA 300 states that prior to starting an initial audit, the auditor shall communicate with the predecessor auditor where there has been a change of auditors, in compliance with relevant ethical requirements. It is not limited to cases of misconduct and cannot be deferred until after reporting.

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