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

Sharma & Co. has been appointed to replace Rao & Co. as auditor of Bharat Agro Ltd. The appointment is an initial engagement for Sharma & Co. As per SA 300, what must Sharma & Co. do before starting the initial audit, in addition to the acceptance procedures?

The incoming auditor must communicate with the predecessor auditor, in compliance with relevant ethical requirements, before starting the initial audit where there has been a change of auditors. This sits alongside the SA 220 acceptance procedures and is not optional or deferred.

  1. ACommunicate with the predecessor auditor, in compliance with relevant ethical requirementsCorrect
  2. BAsk management to sign the audit report in advance
  3. CObtain a written waiver from the predecessor auditor to start the audit
  4. DWait until the first year audit is completed before considering ethical requirements

Explanation

Where there has been a change of auditors, SA 300 requires the incoming auditor to communicate with the predecessor auditor in compliance with relevant ethical requirements before starting the initial audit. A waiver is not required, and ethical considerations are not deferred.

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