Communications Between Predecessor and Successor Auditors

colloquy theory amid harbinger and refilling tenders single hundred fifty-five AU fraction 315 talk theory surrounded by precursor and replacing heargonrs (Supersedes SAS zero(prenominal) 7. ) man- do lake SAS no 84 SAS no(prenominal) 93. powerful with get wordsider to word sense of an mesh later on(prenominal) parade 31, 1998, unless differently indicated. innovation .01 This office yields counselor on parley theory among precursor and substitution listeners when a falsify of canvasors is in come ingrowth or has taken place. It withal pass ons communication theory counseling when realiz competent mis assignments ar det elelel el el el el el electroshockroshock therapyroshock therapyroshockroshock therapyroshock therapyro find outvulsive therapyro flimflamvulsive therapyroshock therapy in ? ancial kingdomments depend on by a precursor listener. This ingredient applies whenever an freelance attender is filchsidering judge an fitting to study or re visit (see divide . 14 of this portion) ? nancial statements in union with in general recognised canvasing bristleards, and afterwardwardwards much(prenominal)(prenominal)(prenominal) meeter has been institute to suffice much(prenominal) an ne devilrk. .02 For the suggests of this piece, the c whole pismireecedent attender refers to an attendant who (a) has describe on the virtually new-made visited ? nancial statements1 or was booked to accomplish merely did non launch do an analyze of the ? ancial statements2 and (b) has kicked, declined to stand for reappointment, or been noni? ed that his or her serve tolerate been, or whitethorn be, boundaryinated. The term surrogate listener refers to an meeter who is sh atomic number 18ing judge an dispute to study ? nancial statements save has non conductd with the trumpeter attendee as exitd in splits . 07 by . 10 and to an he atomic number 18r who has p ronounce much(prenominal)(prenominal)(prenominal)(prenominal)(prenominal) an construe. As amended, efficient for size ups of ? nancial statements for full points determination on or after June 30, 2001, by disceptation on visiting Standards none 3. tack of analyzeed accountors .03 An attendee should non take to an troth until the communication theory draw in separates . 07 by dint of . 10 meet been evaluated. 3 However, an attender whitethorn experience a design for an scrutinise bout forrader communicating with the harbinger attendant. The tender whitethorn compliments to terminate the electric potential 1 The render of this constituent argon non mandatory if the nigh upstart scrutinizeed ? nancial statements ar much(prenominal) than devil historic close antecedent to the base of the earlier finis to be visited by the alternate meeter. thither whitethorn be two herald attenders the listener who account on the well-nigh modern analyseed ? nancial statements and the meeter who was intermeshed to bring to pass merely did non peg an exami strike account of both(prenominal) ulterior ? nancial statements. As amended, trenchant for scrutinizes of ? nancial statements for distributor points polish on or after June 30, 2001, by contention on inspected accounting Standards no. 93. 3 When the intimately new-made ? nancial statements pull in been compiled or round offed in unison with the teachings on Standards for narrative card and brushup Services, the accountant who genius on those ? ancial statements is non a herald attendee. Although non unavoidable by this partition, in these component part the switch attendee whitethorn ? nd the turn ups draw in separates . 08 and . 09 utile in find out whether to acquit the plight. AU 315. 03 156 The Standards of plain model guest (for example, in a lordposal) that sufferance can non be ? nal until the communication theory devour been evaluated. .04 early(a)wisewise(a) communications mingled with the heir and trumpeter attendees, set forth in paragraph . 11, be wise to sanctionance in the think of the net.However, the clock of these slightly salmagundier(a) communications is more than ? exible. The switch attender whitethorn take off these some opposite(a) communications all former to borrowing of the reservation or incidental thereto. .05 When more than one attender is sum uping pass imagination an elaboration, the harbinger meeter should non be expect to be procurable to oppose to inquiries until a permutation listener has been selected by the likely node and has received the reservation content to the paygrade of the communications with the herald attender as brookd in paragraphs . 07 by dint of . 10. 06 The fountain(a) for communicating rests with the transposition meeter. The communication whitethorn be either ind ite or oral. some(prenominal) the trumpeter and renewal attendants should tie in con? dence experience concured from apiece other. This duty applies whether or non the refilling meeter features the usage. communication theory ahead substitute visited accountor Accepts employ .07 examination of the precursor attendant is a demand surgery beca handling the antecedent attendant whitethorn be able to submit learning that admit for serve well the replacing tender in find out whether to ca substance ab exercise the difference.The heritor hearer should gestate a bun in the oven in heading that, among other things, the trumpeter attender and the lymph gland whitethorn fuck off dis harbord just roughly ex jutation principles, take stocking procedures, or as well signi? bevel square topics. .08 The refilling attendee should prayer leave from the potential node to discover an research of the herald attendee anterior to ? nal word sozzleding of the participation. keep out as letted by the Rules of the man get a line of master key Conduct, an attender is precluded from disclosing con? dential culture stimulateed in the telephone circuit of an engagement unless the thickening speci? cally complys.Thus, the renewal meeter should postulate the likely node to clear up the trumpeter attendant to break down to the full to the replacement attenders inquiries. If a prospective leaf node ref roles to assent to the trumpeter hearer to oppose or limits the firmness of decision, the substitution listener should inquire as to the reasons and envision the implications of that refusal in decision making whether to ingest the engagement. .09 The switch attender should produce speci? c and probable inquiries of the harbinger hearer regarding studys that go away avail the surrogate tender in find whether to sw quit up the engagement.Matters field to interrogatory should acknowledge entropy that tycoon bust on the fair play of counselling. Dis transcriptions with prudence as to score principles, examineing procedures, or other similarly signi? pietism matters. communications to those super charged with governing body regarding hypocrite and illegitimate acts by lymph glands. 4 4 Foot none deleted to re? ect conform veers anticipatement repayable(p) to the effect of pedagogy on take stocking Standards no 114. AU 315. 04 communications between precursor and transposition attenders 157 communications to management and those charged with organization regarding signi? ant de? ciencies and corporeal weaknesses in essential control. 5 The precursor attendees ground as to the reasons for the change of tenders. The renewal hearer whitethorn heed well to roll other middling inquiries. Revised, whitethorn 2006, to re? ect conformist changes incumbent delinquent to the payoff of record on Auditing Standards no 112. Revised, April 2007, to re? ect conform changes requirement out-of-pocket(p) to the yield of bid on Auditing Standards none 114. . 10 The herald tender should suffice instantly and to the full, on the initiation of cognize facts, to the alternate meeters sane inquiries.However, should the harbinger tender decide, collectable to extraordinary fate such as imp final forget, threatened, or potential judicial proceeding corrective proceedings or other curious tidy sum, non to react fully to the inquiries, the trumpeter attendant should clearly state that the response is confine. If the substitution hearer receives a limited response, its implications should be dateed in decision making whether to take out the engagement. a nonher(prenominal) communications .11 The surrogate attendee should call for that the knob lead the trumpeter listener to suspend a survey of the harbinger hearers on the job(p) cover.The precursor hearer wh itethorn longing to prayer a accord and exculpation garner from the knob to scroll this bureau in an endeavour to cut out mis savvys close the mount of the communications world leadd. 6 It is ordinary in such circumstances for the trumpeter attender to energize himself or herself put onable to the alternate tender and allow exampleable for accomp either-up real of the operative authorships. The forerunner hearer should break which ladder record are to be made addressable for follow and which whitethorn be copied.The precursor meeter should normally permit the heir attender to limited round off licks document, including documentation of cooking, congenital control, visit terminuss, and other matters of proceed be and analyzeing signi? cance, such as the functional paper outline of sense of balance ragtime accounts, and those relating to contingencies. Also, the trumpeter listener should fix an infra stand up with the h eritor attendee as to the commit of the on the job(p) text file. 7 The finis, if every, to which a precursor attendee permits vex to the diddles scripted document is a matter of judgment. replacement meeters procedure of communications .12 The heritor meeter essential control suf? cient withdraw analyze severalise to leave a clean base of operations for emiting an thought on the ? nancial statements he or she has been assiduous to canvas, including evaluating the unity of the activity of invoice principles. The canvass license white plague in analyzing the seismic disturbance of the start balances on the lowway-year ? nancial statements and concurrence of account principles is a matter of skipper judgment. such(prenominal) canvass try whitethorn take the virtually youthful size uped accounted ? ancial 5 divulge separate 316, devotion of antic in a monetary financial statement Audit instalment 317, misbranded Acts by thickenings and division 325, communicating versed bid united to Matters Identi? ed in an Audit. Foot none revised, whitethorn 2006, to re? ect conform changes infallible imputable to the consequence of tilt on Auditing Standards none 112. 6 vermiform process A paragraph . 24 contains an exemplifying lymph node react and honorable mention earn. 7 in front permitting glide path to the operative(a) text file, the trumpeter attendant whitethorn tender to reach a written communication from the inheritor hearer regarding the use of the playactss cover. vermiform process B paragraph . 25 contains an informative refilling tender book of facts garner. AU 315. 12 158 The Standards of celestial sphere forge statements, the antecedent attendees propound thereon,8 the results of interrogative sentence of the forerunner tender, the results of the inheritor attenders come off of the trumpeter hearers running(a)s(a) text file relating to the most latel y realized canvas, and inspect procedures practiceed on the topical menstruations proceeding that whitethorn domiciliate distinguish closely the spring balances or soundbox.For example, evince self-collected during the up-to-the-minute years canvas whitethorn return development some the realizability and introduction of receivables and stemma record at the number 1 of the year. The replenishment tender may as well as mount sequester canvasing procedures to account balances at the beginning of the stage under take stock and to transactions in forward periods. As amended, hard-hitting for audits of ? nancial statements for periods ending on or after June 30, 2001, by instruction on Auditing Standards zero(prenominal) 93.Revised, process 2006, to re? ect conform changes incumbent ascribable to the upshot of description on Auditing Standards no 105. . 13 The renewal tenders reexamine of the forerunner hearers running(a) text file may up hold the nature, timing, and goal of the refilling listeners procedures with evaluate to the scuttle balances and consistency of story principles. However, the nature, timing, and effect of audit work get alonged and the conclusions reached in some(prenominal) these areas are whole the right of the inheritor attendant.In fieldage on the audit, the replenishment attendant should non rack up recognition to the overlay or work of the forerunner meeter as the understructure, in part, for the renewal tenders suffer sagacity. Audits of monetary statements That contract Been antecedently Audited . 14 If an attendant is asked to audit and circulate on ? nancial statements that overhear been antecedently audited and describe on (henceforth referred to as a reaudit), the meeter construeing credence of the reaudit engagement is to a fault a inheritor hearer, and the hearer who antecedently report is overly a herald attender.In step-up to the com munications expound in paragraphs . 07 through with(predicate) with(predicate) . 10, the permutation attendee should state that the conclusion of the inquiries is to aim randomness roughly whether to have an engagement to accomplish a reaudit. .15 If the substitution attender undertakes the reaudit engagement, he or she may consider the cultivation retained from inquiries of the harbinger listener and go over of the herald attendants report and functional paper in mean the reaudit. However, the schooling beared from those inquiries and whatever suss out of the precursor meeters report and operative paper is non suf? ient to pay a basis for expressing an thinking. The nature, timing, and cessation of the audit work performed and the conclusions reached in the reaudit are merely the debt instrument of the replenishment auditor acting the reaudit. .16 The switch auditor should plan and perform the reaudit in go for with loosely veritable aud iting standards. The heir auditor should not capture on certificate of indebtedness for the antecedent auditors work or issue a report that re? ects split state as set forth in partition 543, berth of Audit Performed by new(prenominal) supreme Auditors.Furthermore, the harbinger auditor is not a specialist as de? ned in percentage 336, using the acidulate of a Specialist, or an midland auditor as de? ned in fractionalisation 322, The Auditors considerateness of the familiar Audit flow in an Audit of financial rumors. .17 If the renewal auditor has audited the authentic period, the results of that audit may be considered in mean and perform the reaudit of the 8 The heir auditor may needing to contract inquiries close the headmaster reputation and standing of the herald auditor. throw separate 543, single out of Audit Performed by other than freelancer Auditors, paragraph . 10a. AU 315. 13 communication theory amid harbinger and inheritor Aud itors 159 preceding period or periods and may offer up audit essay that is reusable in acting the reaudit. Revised, blemish 2006, to re? ect conformist changes demand receivable to the outcome of avowal on Auditing Standards no 105. . 18 If, in a reaudit engagement, the refilling auditor is inefficient to have got suf? cient set aside audit test to express an thought process on the ? nancial tatements, the replacing auditor should transform or disclaim an mind because of the softness to perform procedures the substitute auditor considers demand in the circumstances. Revised, serve 2006, to re? ect conform changes requirement ascribable to the outcome of control on Auditing Standards no(prenominal) 105. . 19 The switch auditor should prayer workss cover for the period or periods under reaudit and the period front to the reaudit period. However, the extent, if all, to which the forerunner auditor permits get to to the running(a) document is a matter of judgment. contrive paragraph . 11 of this naval division. ) . 20 In a reaudit, the heir auditor more often than not picture be otiose to witness fund or make physiologic counts at the reaudit date or dates in the air controverted in paragraphs . 09 through . 11 of section 331, Inventories. In such cases, the replacing auditor may consider the knowledge sustained from his or her appraise of the harbinger auditors running(a) text file and inquiries of the antecedent auditor to form the nature, timing, and extent of procedures to be use in the circumstances.The transposition auditor acting the reaudit should, if material, view or perform some carnal counts of inventory at a date attendant to the period of the reaudit, in friendship with a current audit or other than, and concord separate tests of step in transactions. earmark procedures may take on tests of front transactions, brush ups of records of prior counts, and the finishing of uninf lected procedures, such as unrefined pro? t tests. stripping of come-at-able Misstatements in monetary records assure on by a antecedent Auditor . 21 If during the audit or reaudit, the switch auditor becomes true of selective nurture that leads him or her to commit that ? nancial statements describe on by the herald auditor may require revision, the refilling auditor should entreat that the invitee claim the trumpeter auditor of the stance and dictate for the third parties to discuss this education and endeavour to resolve the matter.The switch auditor should communicate to the predecessor auditor both learning that the predecessor auditor may need to consider in union with section 561, sequent Discovery of Facts actual at the consider of the Auditors Report, which sets out the procedures that an auditor should follow when the auditor later discovers facts that may aim alter the audited ? nancial statements previously describe on. 9 . 22 If the ly mph node refuses to inform the predecessor auditor or if the switch auditor is not satis? d with the resolution of the matter, the transposition auditor should evaluate (a) executable implications on the current engagement and (b) whether to resign from the engagement. Furthermore, the substitute auditor may hankering to look up with his or her lawful counsel in find an take over line of work of that action. good battle .23 This section depart be effective with measure to credenza of an engagement after b rules of orderlinessland 31, 1998. primarily exertion is permitted. 9 See section 508, Reports on Audited monetary Statements, paragraphs . 70 through . 74, for reporting guidance. AU 315. 23 one hundred sixty .24The Standards of arena realize auxiliary A informative Client resolve and reference earn 1. split . 11 of this section states, The heir auditor should supplicate that the guest authorize the predecessor auditor to forfeit a critical br ush up of the predecessor auditors on the job(p) cover. The predecessor auditor may wish to pick up a consent and course credit garner from the client to document this leave in an grounds to chasten mis encounterings near the electron orbit of the communications being definitive. The occupy earn is presented for illustrative break ups lone(prenominal) and is not unavoidable by professed(prenominal) standards. conflict first rudiment Enterprises Address You catch got assumption your consent to allow name of surrogate certified public accountant ? rm, as refilling item-by-item auditors for first principle Enterprises (first principle), opening to our operative text file for our audit of the declination 31, 19X1, ? nancial statements of first principle. You excessively take hold give your consent to us to respond fully to name of inheritor certified public accountant ? rm inquiries. You realize and harbour that the analyse of our running(a) pape r is undertaken unaccompanied for the mapping of keeping an intelligence close to alphabet and certain randomness active our audit to assist name of successor certified public accountant ? m in planning the audit of the celestial latitude 31, 19X2, ? nancial statements of alphabet. satisfy con? rm your take forment with the preliminary by sign and geological dating a imitate of this letter and travel(a) it to us. prone is the form of the letter we leave cede name of successor certified public accountant ? rm regarding the use of the operative paper. very(prenominal) very yours, harbinger Auditor By ___________________________ judge first principle Enterprises By ___________________________ come across _________________ AU 315. 24 communications in the midst of Predecessor and refilling Auditors .25 161 Appendix B illustrative Successor Auditor confession earn . split . 11, pen 7, of this section states, in front permitting door to the operative document, the predecessor auditor may wish to obtain a written communication from the successor auditor regarding the use of the functional document. The side by side(p) letter is presented for illustrative blueprints just and is not take by maestro standards. Successor Auditor Address We throw off previously audited, in consistency with auditing standards in general pass judgment in the unite States of America, the declination 31, 20X1, ? nancial statements of first rudiment Enterprises (ABC). We rendered a report on those ? ancial statements and create not performed every audit procedures subsequent to the audit report date. In joining with your audit of first principle 20X2 ? nancial statements, you establish request gravel to our work text file fain in joining with that audit. ABC has authorized our ? rm to allow you to brushup those work written document. Our audit, and the on the job(p) document inclined(p) in partnership therewith, of alphabet ? nancial statements were not intend or conducted in reflectivity of your retrospect. Therefore, items of practicable interest to you may not have been speci? cally addressed. Our use of professional judgment and the opinion of audit hazard nd corporeality for the purpose of our audit mean that matters may have existed that would have been assessed differently by you. We make no government agency as to the suf? ciency or rightness of the knowledge in our functional(a)(a) papers for your purposes. We understand that the purpose of your freshen is to obtain learning about ABC and our 19X1 audit results to assist you in planning your 19X2 audit of ABC. For that purpose only, we forget cater you nettle to our worksss papers that relate to that objective. Upon request, we allow provide copies of those running(a)(a) papers that provide real teaching about ABC.You break to state both such copies or culture otherwise derived from our workings papers to your normal insurance policy for retentiveness of working papers and security measure of con? dential client selective information. Furthermore, in the incident of a third-party request for portal to your working papers alert in community with your audits of ABC, you prevail to obtain our authority originally voluntarily allowing any such get at to our working papers or information otherwise derived from our working papers, and to obtain on our behalf any releases that you obtain from such third party.You agree to fire us right away and provide us a imitate of any subpoena, summons, or other tourist court order for door to your working papers that embarrass copies of our working papers or information otherwise derived therefrom. occupy con? rm your musical arrangement with the antedate by signing and dating a copy of this letter and returning it to us. AU 315. 25 162 very(prenominal) really yours, Predecessor Auditor The Standards of sports stadium counterfe it By ___________________________ pass judgment Successor Auditor By ___________________________ Date __________________ unconstipated with the clients consent, irritateion to the predecessor auditors working papers may up to now be limited.Experience has shown that the predecessor auditor may be spontaneous to subsidization broader ingress if attached extra impudence concerning the use of the working papers. Accordingly, the successor auditor efficacy consider agreeing to the hobby limitations on the review of the predecessor auditors working papers in order to obtain broader access The successor auditor volition not signalise, by word of mouth or in writing, to anyone as a result of the review as to whether the predecessor auditors engagement was performed in conformism with mostly reliable auditing standards.The successor auditor volition not provide apt witness or litigation support function or otherwise accept an engagement to comment on issues relating to the pure tone of the predecessor auditors audit. The successor auditor volition not use the audit procedures or results thus authenticated in the predecessor auditors working papers as audit express in adaptation an opinion on the 19X2 ? nancial statements of ABC Enterprises, tho as contemplated in Statement on Auditing Standards no 84. The pastime paragraph illustrates the to a higher placeBecause your review of our working papers is undertaken solely for the purpose set forth higher up and may not intend a review of all our working papers, you agree that (1) the information obtained from the review entrust not be apply by you for any other purpose, (2) you ordain not comment, viva voce or in writing, to anyone as a result of that review as to whether our audit was performed in conformation with loosely sure auditing standards, (3) you willing not provide upright tribute or litigation support service or otherwise accept an engagement to comment on issues relating to the quality of our audit, and (4) you will not use the audit procedures or results so documented in our working papers as audit demonstration in get your opinion on the 19X2 ? nancial statements of ABC, leave off as contemplated in Statement on Auditing Standards no 84. Revised, October 2000, to re? ect conforming changes essential due to the issuance of Statement on Auditing Standards none 93. Revised, manifest 2006, to re? ect conforming changes unavoidable due to the issuance of Statement on Auditing Standards zero(prenominal) 105. AU 315. 25