Texts: Required information Skip to question Predecessor-Successor Auditor Communications Read the case, then answer the questions that follow. Audit standards require successor auditors to attempt to communicate with the predecessor before accepting an audit engagement. CONCEPT REVIEW: Audit standards require successor auditors to attempt communication with the predecessor auditors. The predecessors must have permission from the previous client before sharing information with the successor auditors. Predecessor auditors will help successor auditors determine whether or not to accept an engagement.
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Read the overview below and complete the activities that follow. Auditors must gather a combination of many types of audit evidence to best reduce their audit risk. There are seven major types of audit evidence: 1) accounting information system, 2) documentary evidence, 3) third-party representation, 4) physical evidence, 5) computations, 6) data interrelationships, and 7) client representations. Concept Review: Audit evidence is any information that corroborates or refutes the auditors' premise that the financial statements present fairly the client's financial position and operating results.
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In making a decision whether to accept or reject an engagement, an auditor should consider the competence, independence, and integrity of the prospective client's management, as well as its ability to serve the client properly. Furthermore, the auditor is expected to perform the following (choose all the items that apply to the previous statement): a. Obtain a preliminary knowledge of the client's business and industry to determine whether the client management has the degree of competence required by the engagement. b. Consider whether there are any threats to the firm's independence and objectivity, and if so, whether adequate safeguards can be established. c. Evaluate auditability. d. Investigate the integrity of the client's management through inquiry to appropriate parties or communication with the successor auditor. e. Agree on the terms of the engagement and prepare a management representation letter. f. Evaluate the firm's ability to serve the prospective client.
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Complete the following chart indicating the corresponding Auditing Standards Board assertions and whether the assertion relates to transactions, balances, or disclosures. (You may select more than one answer. Click the box with a check mark for correct answers and double click to empty the box for the wrong answers.)
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