Communications between Predecessor and Successor Auditors: Assignment

Topics: Audit, Financial audit, Auditing Pages: 3 (815 words) Published: November 5, 2008
Question 1: 15 points
AU Section 315 Communications Between Predecessor and Successor Auditors .01-.13 Using the facts from the ZZZZ Best case and professional guidance from AU Section 315, explain the following:

A. As the successor auditor, what was E&W suppose to do before they accepted ZZZZ Best as an audit client in regards to Greenspan? Summarize in enough detail Au 315.03-.06. In your answer give and support your opinion as to whether or not E&W violated these paragraphs and if you can prove it as a fact.

As the successor auditor (an auditor considering accepting an engagement to audit financial statements), Ernst & Whinney was supposed to contact George Greenspan for information on ZZZZ Best prior to accepting them as a client. An auditor should not accept a client without first evaluating any communication from the predecessor auditor (Au 315.03). The predecessor auditor may be defined as the auditor who (a) has reported on the most recent audited financial statements or was engaged to perform but did not complete an audit of the financial statements and (b) has resigned, declined to stand for reappointment, or been notified that his or her services have been, or may be, terminated (Au 315.02). This information required by the successor auditor for planning purposes, may be requested prior to or shortly thereafter accepting the client (Au 315.04). Ernst & Whinney claims they requested information on ZZZZ Best from George Greenspan but, according to testimony, did not comment on the nature or content of the communication between the two parties. George Greenspan, on the other hand, denies that Ernst & Whinney contacted him and was never recalled to rebut Ernst & Whinney’s testimony on the matter. It is the responsibility of the successor auditor to approach the predecessor auditor before accepting the engagement, and the communication may be either written or oral. However, both the predecessor and successor auditors should keep...
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