This section provides guidance on communications between predecessor and successor auditors when a change of auditors is in process or has taken place. It also provides communications guidance when possible misstatements are discovered in financial statements reported on by a predecessor auditor. This section applies whenever an independent auditor is considering accepting an engagement to audit or reaudit (see paragraph .14 of this section) financial statements in accordance with generally accepted auditing standards, and after such auditor has been appointed to perform such an engagement. .02
For the purposes of this section, the term predecessor auditor refers to an auditor who (a) has reported on the most recent audited financial statements fn 1 or was engaged to perform but did not complete an audit of the financial statements fn 2 and (b) has resigned, declined to stand for reappointment, or been notified that his or her services have been, or may be, terminated. The term successor auditor refers to an auditor who is considering accepting an engagement to audit financial statements but has not communicated with the predecessor auditor as provided in paragraphs .07 through .10 and to an auditor who has accepted such an engagement. [As amended, effective for audits of financial statements for periods ending on or after June 30, 2001, by Statement on Auditing Standards No. 93.] Change of Auditors
An auditor should not accept an engagement until the communications described in paragraphs .07 through .10 have been evaluated. fn 3 However, an auditor may make a proposal for an audit engagement before communicating with the predecessor auditor. The auditor may wish to advise the prospective client (for example, in a proposal) that acceptance cannot be final until the communications have been evaluated. .04
Other communications between the successor and predecessor auditors, described in paragraph...