Statements of Position

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The Auditing Standards Board (ASB) has issued this exposure draft to provide appropriate guidance on the auditor's responsibility regarding communications between predecessor and successor auditors. This proposed Statement provides guidance relating to communications between predecessor and successor auditors when a change of auditors has taken place or is in process. This proposed Statement: 1. Revises the definitions of predecessor and successor auditors to reflect the current proposal environment found in today's practice. 2. Expands the required communications with the predecessor auditor before the successor auditor accepts an engagement to include inquiries about communications made by the predecessor auditor to audit committees or others with equivalent authority and responsibility as described in SAS No. 82, Consideration of Fraud in a Financial Statement Audit (AICPA, Professional Standards, vol. 1, AU sec. 316), SAS No. 54, Illegal Acts by Clients (AICPA, Professional Standards, vol. 1, AU sec. 317), and SAS No. 60, Communication of Internal Control Related Matters Noted in an Audit (AICPA, Professional Standards, vol. 1, AU sec. 325), and any other reasonable inquiries that the successor auditor may wish to ask the predecessor auditor. 3. Clarifies the successor auditor's responsibility with respect to obtaining sufficient competent evidential matter used in analyzing the impact of the opening balances on the current year financial statements and consistency of accounting principles as a matter of professional judgment. Examples of audit evidence provided include the most recent audited financial statements, the predecessor auditor's report thereon, the results of inquiry of the predecessor auditor, the results of the successor auditor's review of the predecessor auditor's working papers, and audit procedures performed on the current period's transactions that may provide evidence about the opening balances or consistency. 4. Expands the working papers ordinarily made available to the successor auditor by the predecessor auditor to include documentation of planning, internal control, audit results and other matters of continuing audit significance. 5. Introduces an illustrative client consent and acknowledgment letter and an illustrative successor auditor acknowledgment letter. A predecessor auditor may conclude that obtaining written communications from both the former client and the successor auditor will allow greater communication between both parties and greater access to the working papers than would be the case in the absence of such communications. The ASB believes that it is in the public interest for successor auditors to have greater access to working papers and, accordingly, for all practitioners to have access to these letters and to use them in their practice if they so choose. These letters are presented for illustrative purposes only and not as a requirement by the proposed Standard. 6. Incorporates the Interpretations, Communications Between Predecessor and Successor Auditors Auditing Interpretations of Section 315 (AICPA, Professional Standards, vol. 1, AU sec. 9315), into the proposed Statement. This proposed Statement would supersede SAS No. 7, Communications Between Predecessor and Successor Auditors (AICPA, Professional Standards, vol. 1, AU sec. 315), and Its Interpretations.

ISBN

ed97-03-07bt

Publication Date

1997

Relational Format

Book

Keywords

Communication in accounting -- Standards -- United States

Disciplines

Accounting | Taxation

Comments

Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants; Exposure draft (American Institute of Certified Public Accountants), 1997, Mar. 7

Proposed statement on auditing standards : communications between predecessor and successor auditors : (to supersede Statement on auditing standards no. 7, Communications between predecessor and successor auditors, and its interpretations);Communications between predecessor and successor auditors : (to supersede Statement on auditing standards no. 7, Communications between predecessor and successor auditors, and its interpretations)

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