Audit standards require that successor auditors communicate withpredecessor auditors prior to accepting an engagement. Predecessorauditors, however, cannot share confidential client informationwithout the permission of the client. Once permission is granted,communication can begin and includes conversations about the clientto help the successor auditor determine if client acceptanceappears appropriate. For example, conversations will includediscussion about management integrity, any disagreements withmanagement, communication with those charged with governance, andthe reason for the auditor change. Smith Jones, CPA, was thepredecessor auditor for Awesome Adventures, Inc. Jones was toldthat the firm was terminated and Awesome Adventures was to retainRich Fortune, CPA. Rich Fortune contacted Smith Jones in order tohave a predecessor-successor conversation. Smith Jones indicatedthat Awesome Adventures was a long-time client of the firm and thatthe dispute which led to the termination of its servicessignificantly revolved around audit fees. Jones indicated thatmanagement put unusual time deadlines on the CPAs, and theysometimes felt rushed to complete the audit. 1. What step did RichFortune fail to perform? 2. Rich Fortune appears to have askedSmith Jones about management integrity, disagreements withmanagement, and the reason for the auditor change. What did RichFortune fail to ask Smith Jones? 3. What should Rich Fortune dowith the information about the unnecessary time pressure?
Audit standards require that successor auditors communicate withpredecessor auditors prior to accepting an engagement. Predecessorauditors, however, cannot share confidential client informationwithout the permission of the client. Once permission is granted,communication can begin and includes conversations about the clientto help the successor auditor determine if client acceptanceappears appropriate. For example, conversations will includediscussion about management integrity, any disagreements withmanagement, communication with those charged with governance, andthe reason for the auditor change. Smith Jones, CPA, was thepredecessor auditor for Awesome Adventures, Inc. Jones was toldthat the firm was terminated and Awesome Adventures was to retainRich Fortune, CPA. Rich Fortune contacted Smith Jones in order tohave a predecessor-successor conversation. Smith Jones indicatedthat Awesome Adventures was a long-time client of the firm and thatthe dispute which led to the termination of its servicessignificantly revolved around audit fees. Jones indicated thatmanagement put unusual time deadlines on the CPAs, and theysometimes felt rushed to complete the audit. 1. What step did RichFortune fail to perform? 2. Rich Fortune appears to have askedSmith Jones about management integrity, disagreements withmanagement, and the reason for the auditor change. What did RichFortune fail to ask Smith Jones? 3. What should Rich Fortune dowith the information about the unnecessary time pressure?
