Communication with predecessor auditor isa. Executive Summary “SAS No.
Communication with predecessor auditor isa Thus, the successor auditor conducts the audit for the current year when there was a predecessor auditor in the immediately preceding year. Communications Between Predecessor and Successor Auditors 3 the basis of facts known to him, to the successor's reasonable inquiries. Glynn (December 2020) Page 1 of 5 Agenda Item 1. Your strategy is a “big picture” view of the audit (ISA 300. The guide answers common questions from auditors on meeting these requirements, including: how to apply them to smaller entities and how to One of the results of these efforts by the ASB is the issuance of SAS No. The communication may be either written or oral. SAS 147 provides guidance regarding auditor inquiries made of a predecessor auditor about matters that will help the auditor decide whether or not to accept the Like its predecessor, SAS No. The auditor shall establish an overall audit strategy that sets the scope, timing and direction of the audit, and that guides the development of the audit plan. Executive Summary “SAS No. This International Standard on Auditing (ISA) deals with additional communication in the auditor’s report when the auditor considers it necessary to: (a) Draw users’ attention to a Section 13 of ISA 300 Additional considerations in initial audit engagements, states that the auditor shall(b) communicate with the predecessor auditorprior to starting an initial audit. Evaluating whether audit procedures performed in the current period provide evidence relevant to the opening Communications Between Predecessor and Successor Auditors (Supersedes Statement on Auditing Standards No. 940] • SAS No. [AR/Article 11. , _____ must ask management to authorize the predecessor auditors to discuss confidential information. If the prior period’s financial statements were audited by a predecessor auditor and there was a modification to the opinion, the auditor shall evaluate the effect of the matter giving rise to the modification in assessing the risks of material misstatement in the current period’s audit and the nature of the communications required; (c) Consider the factors that, in the auditor’s professional judgment, are significant 6 ISA (Ireland) 230, Audit Documentation, paragraphs 8-11, and paragraph A6. 08 The successor accountant also may wish to review the predeces-sor's engagement documentation (terms such as workingpapersor workpa- This International Standard on Auditing (ISA) deals with additional communication in the auditor’s report when the auditor considers it necessary to: (a) Draw users’ attention to a matter or matters presented or disclosed in the financial matters and any additional communication in the auditor’s report in accordance with this ISA International Standard on Auditing (Ireland) 710 deals with the auditor’s responsibilities relating to comparative information in an audit of financial statements. This Hong Kong Standard on Auditing (HKSA) deals with the auditor's responsibility to communicate key audit matters in the auditor's report. ISA 510 rules based approach is interpreted as a measure to reduce auditor’s risk. 2(g)] 8R-2. This ISA (Ireland) is effective for the audits of financial statements for periods commencing on or after 15 July 2021. Internal audit, GST audit, concurrent audit, stock audit, revenue audit or any other kind of audit, whether of government or non-government entities, where the previous auditor is a Chartered Accountant. 79 through . [AR/Article 10. The contents of the engagement letter . The term "predecessor auditor" refers to an auditor who has resigned or who has been notified that his services have been terminated. 3 ISA 210, “Agreeing the Terms of Audit Engagements,” paragraphs 9-13. Business Acquisitions — SEC Reporting Considerations Business Combinations Carve-Out Financial Statements Comparing IFRS Accounting Standards and U. both prior to acceptance of the engagement and after the engagement has been accepted. 1 ISA (Ireland) 220 (Revised November 2020), Quality Control for an auditor's communication with an entity's management or owners unless they are also charged with a governance role. Revisions to this ISA are as a result of new ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report. In . The purpose of this Statement is to provide authorization of the successor auditor’s discussion with the predecessor auditor mitigates the risk of negative professional or legal consequences. The group auditor is responsible for expressing an audit opinion on whether the group financial statements give a true and fair view (or are presented The quality management-related conforming amendments to the Code that were issued as a result of the finalization of the International Auditing and Assurance Standards Board’s (IAASB) suite of quality management standards. must ask management to authorize the predecessor auditors to discuss confidential information. ISA 210 does not contain these requirements. Reanna Berry explains the practice and process of communicating with a predecessor auditor. 2(c)] Auditor’s Responsibilities for the Audit of the Financial Statements . The Internet is a private network that only International Standard on Auditing (ISA) 260 (Revised), Communication with Those Charged with Governance, should be read in conjunction with ISA 200, auditor’s communication with an e ntity’s management or owners unless they are also charged with a governance role. Accordingly, information is likely to be necessary in particular for such For example in the case of a financial statement audit, ISAs will indicate the audit working papers to be prepared. (the ‘predecessor’) is required to provide access to relevant information where the newly appointed registered auditor (the ‘successor’) makes a written request obtain an understanding of the predecessor auditor’s methodology used to carry out the audit, sufficient to enable the auditor to communicate with those charged with governance those of the Luxembourg supplement to ISA 260 (Revised). SAS 84, AS 2610, ISA 300 and ISA 510) and previous studies suggest that communication between predecessor and successor auditors, either during internal or external audit firm rotation, is an Auditing (ISA) 510, Initial Audit Engagements-Opening Balances (the “proposed standard”) as developed by the International Auditing and Assurance Standards Board Paragraphs A2 and A3 discuss communications with the predecessor auditor and review of his or her working papers. I. International Standard on Auditing (New Zealand) (ISA (NZ)) 510, “Initial Audit Engagements – Opening Balances” should be read in conjunction with ISA (NZ) 200, “Overall Objectives of the Independent Auditor and the Conduct of communications with the predecessor auditor. Effective Date 10. Inquiry of the Relevant Information in the Predecessor Auditor’s Report 9. accepting the engagement. 7 and . For the purposes of the ISAs (NZ), the following terms have the meanings attributed below: Initial audit engagement – An engagement in which either:. If so, the successor auditor will need the client’s permission to discuss matters with the predecessor auditor. 7 ISA 510, paragraph 6. Comments from ACCA July 2005. Shopping for accounting principles is _____ by 3. A5. In ISA 210 requires the auditor to consider whether there is a need to remind the entity of the existing terms of the audit engagement for recurring audits and many firms choose to send a new letter every year, to emphasise its importance to clients. 4. 2 ISA 220, paragraphs 9-11. The successor auditor might have been hired because the predecessor was fired, or because the 16. In 2016, the International Auditing and Assurance Standards Board (IAASB) revised ISA 250, Consideration of Laws and Regulations in an Audit of Financial Statements, to reflect certain relevant changes as adopted in the IESBA code. Additional Review the predecessor auditor’s working papers to obtain evidence regarding the opening balances. Hurd, CPA. ] PSA 510 6 Relevant ethical and professional requirements guide the current auditor’s communications with the predecessor auditor. 8), e. Study with Quizlet and memorize flashcards containing terms like how do the requirements for the terms of the engagement differ in ISA and US auditing standards?, When is audit over in ISA and US?, who requires fraud brainstorming? and more. ”5 ISA 330, “The predecessor auditor agrees to issue a new auditor’s report on the amended financial Auditor’s Report, paragraph 8. Predecessor auditors, however, cannot share confidential client information with; According to ISA 210 before accepting (or continuing with) an engagement, the auditor must establish whether the preconditions for an audit If predecessor auditors refuse communication, successor auditors 4. A31: A26: Relevant ethical and professional requirements guide the auditor’s : accountant’s: communications with the predecessor auditor 'udiw /hwwhu ri &rppxqlfdwlrq zlwk 3uhylrxv $xglwru %\ 53$' +dqg 'holyhu\ 'dwh 0u &$ 6zdwdqwu . Successor auditors can opt to review the predecessor auditor’s working papers to obtain audit evidence regarding the opening balances, if the prior year financial statements were audited. For statutory audits of financial statements of public-interest entities, ISA 260 (Revised) 1. PCAOB standards at AS 2610 require the successor auditor to communicate with and make a variety of inquiries with the predecessor auditor prior to accepting the engagement and that acceptance cannot be final until the communications received from the predecessor have been evaluated. . Certification: 2. We believe that additional application material should be The American Institute of CPAs (AICPA) Auditing Standards Board (ASB) has issued the exposure draft (ED) Proposed Statement on Auditing Standards (SAS) Inquiries of the Predecessor Auditor Auditing (ISA) 510, Initial Audit Engagements-Opening Balances (the “proposed standard”) as developed by the International Auditing and Assurance Standards Board Paragraphs A2 and A3 discuss communications with the predecessor auditor and review of his or her working papers. Effective for audits of financial statements for periods beginning on or after December 15, 2006. NOCLAR. This International Standard on Auditing (ISA) deals with the auditor’s responsibilities relating to comparative information in an audit of financial statements. A63-1. The new audit client's refusal to allow this communication to occur would impact Smith's decision concerning A. To take responsibility for obtaining the client's consent for the predecessor to give information about prior audits. 5. 1 If issued as final, the proposed SAS will amend the SAS No. The Nature of Comparative Information 6 ISA 260, “Communication with Those Charged with Governance,” paragraph 13. Even in a case where [The following paragraph was effective for audits of fiscal years beginning before December 15, 2014. Relevant Information in the Predecessor Auditor’s Report 9. ISA 706 (REVISED), EMPHASIS OF MATTER PARAGRAPHS AND OTHER MATTER PARAGRAPHS IN THE INDEPENDENT AUDITOR’S REPORT Introduction Scope of this ISA 1. 510 (redrafted), initial audit engagements—opening balances; the proposed statement on auditing standards (sas), initial audit engagements, including reaudits—opening balances; and au section 315, communications between predecessor and successor auditors (aicpa, professional The auditor also needs to communicate with the predecessor auditor. Assessment ISA 200 “Overall objectives of the independent auditor and the conduct of an audit in accordance with International Standards on This document discusses guidance on communications between predecessor and successor auditors when there is a change in auditors. example, the standards of a national professional accountancy body. Written communication with the client. The peer review Governance is based on International Standard on Auditing (ISA) 260 (Revised), Communication with Those Charged with Governance of the International Auditing and Assurance Standards As of January 2024, this HKSA conforms with International Standard on Auditing (ISA) 510, Initial Audit Engagements Relevant ethical and professional requirements guide the current Standard on Auditing (ISA) 600, “The Work of Related Auditors and Other Auditors in the Audit Standards and guidance on communication between the group auditor predecessor auditor. Audit working papers remain property of “legal professional privilege” means a privilege that protects certain communications between the Client, their legal advisers and / or relevant third Additional considerations in initial audit engagements The final section of ISA 300 relates to initial audit engagements, and requires the auditor to perform client and engagement acceptance procedures (as also required by ISA 220), and also to communicate with the predecessor auditor, where there has been a change of auditors, in compliance page 1 of 42 detailed differences between international standard on auditing (isa) no. ISA (Ireland) 570 2 and ISA (Ireland) 720 3 establish requirements and provide Communication with Predecessor Auditors •Process Initiated by the Successor Auditor •Client Permission is Required to Initiate the Contact as well as for the Predecessor to respond to the inquiry •Conduct Interview with the Partner and Manager In-charge •Discuss Risk Areas •Obtain Copies of some or all of audit documentation the shorter name (from ISA (UK) 315 Identifying and Assessing the Risks of Material Misstatement through Understanding of the Entity and Its Environment). current period’s financial statements, the auditor shall communicate the Communications with Predecessor Auditors 5. ) Source: SAS No. : Prepared by: Approved by: Date If Accepted: Next Additional considerations in initial audit engagements The final section of ISA 300 relates to initial audit engagements, and requires the auditor to perform client and engagement acceptance We would like to show you a description here but the site won’t allow us. Opening balances – Those account balances that AUDITOR’S REPORT. Nothing in this ISA (Ireland) precludes the auditor from communicating any other matters to those charged with governance. This ISA focuses primarily on communications from the auditor to those charged with governance. Both the predecessor and successor auditors should hold in confidence What is a Successor Auditor? A successor auditor is the outside auditor of an organization that replaces the predecessor auditor. ordination of, and communication between, team members are easier. ]. 152–164 . If the client refuses to inform the predecessor auditor, or if the successor auditor is not satisfied with the resolution of the A5 Relevant ethical and professional requirements guide the current auditor’s communications with the predecessor auditor. To conduct interviews with the partner and manager in charge of the predecessor Communication With Those Charged With Governance . g. 230–259 . Communicate with outgoing auditor Guidance in IFAC code of ethics Request client permission to communicate with predecessor auditor Communicate with predecessor auditor to ascertain if there are any technical/ethical Study with Quizlet and memorize flashcards containing terms like The permanent file of an auditor's working papers generally would not include:, A successor auditor most likely would make specific inquiries of the predecessor auditor regarding:, A successor auditor ordinarily should request to review the predecessor's working papers relating to: and more. body. In para 13 ISA 300 is simply saying that Effective communication is critical for internal auditors as it ensures clear understanding, fosters trust, and facilitates the resolution of issues, ultimately leading to more accurate and impactful The standard outlines requirements for the auditor to read prior period financial statements and audit reports, determine if opening balances contain misstatements, evaluate This guide outlines the requirements on communicating with those charged with governance in an ISA audit. xpdu vlqjk 0 v 5dmsxw -dlq dqg $vvrfldwhv • SAS No. COMMUNICATIONS BETWEEN PREDECESSOR AND SUCCESSOR AUDITORS. Title: Comment Letter: Proposed Statements on Auditing Standards — Inquiries of the Predecessor Auditor Regarding Fraud and Noncompliance with Laws and Regulations The successor auditor should communicate to the predecessor auditor any information that the predecessor auditor may need to consider that may have affected the audited financial statements previously reported on. Auditing (ISA) 510, Initial Audit Engagements-Opening Balances (the “proposed standard”) as developed by the International Auditing and Assurance Standards Board Paragraphs A2 and A3 discuss communications with the predecessor auditor and review of his or her working papers. (b) Opening balances – Those account balances that exist at the beginning of the the auditor shall communicate the misstatements with the appropriate level of management If predecessor auditors refuse communication, successor auditors 4. This ISA also ISA 230, Audit Documentation . In any event, the successor auditor is required to initiate communications with the predecessor auditor prior to accepting the engagement (see AU-C 210. Nothing in this ISA precludes the auditor from communicating any other matters to those charged with governance. Scope of this ISA. The successor auditor should request that the client authorize the predecessor auditor to allow a review of the predecessor auditor's Communications to Management and with Those Charged With Governance . The auditor shall communicate in writing with those charged with governance regarding significant findings from the audit if, in the auditor’s professional were audited by a predecessor auditor, the incumbent may be able to obtain sufficient appropriate audit evidence regarding the opening balances by reviewing the predecessor auditor’s working papers. Title: Comment Letter: Proposed Statements on Auditing on Auditing (ISA) 315 (Revised), Identifying and Assessing the Risks of Material Misstatement (ISA 315 (Revised 2019)) on 19 December 2019. Study with Quizlet and memorize flashcards containing terms like 3. Audit standards require that successor auditors communicate with predecessor auditors prior to accepting an engagement. auditor’s communication with those charged with governance. 27 When initiating communications with predecessor auditors, prospective auditors should expect A. Revised by Auditing Standards Committee in Taiwan on 4 October, 2022. However, should he decide, due to unusual circumstances such as the predecessor auditor’s report on the corresponding figures and decides to do so, the auditor shall state in an Other Matter paragraph in the auditor’s report: (a) That the financial statements of the prior period were audited by the the auditor shall communicate the misstatement with the appropriate level of management and, unless ISA 260 Communication with Those Charged with Governance Paragraphs . 2. contents reported should include the name and the stock code of the auditor switching company, the predecessor and the successor audit firms, the date of change, the reason for the change, the communication between the predecessor and successor auditors, etc. 1 ISA 220, Quality Control for an Audit of Financial Statements, paragraphs 12–13 2 ISA 220, paragraphs 9–11 3 ISA 210, Agreeing the Terms of Audit Engagements, paragraphs 9–13 Study with Quizlet and memorize flashcards containing terms like Successor auditors need to communicate with predecessor auditors _____ accepting the engagement. [Paragraph A2 does not apply in the Philippines and is therefore not used. Summary. in ISA 510 (Redrafted) that is cross-referenced in this paragraph. It also provides In any event, the successor auditor is required to initiate communications with the predecessor auditor prior to accepting the engagement (see AU-C 210. The auditor shall read the most recent financial statements, if any, and the predecessor auditor’s report thereon, if any, for 725 ISA 710 AUDITING Prior Period Financial Statements Audited by a Predecessor Auditor 13. ISA (UK) 510 – Revised June 2016 Requirements Audit Procedures Opening Balances 5. To vote to expose for public comment the proposed revisions to C section 210, AU-Terms of Engagement to require a prospective successor auditor, once management authorizes the predecessor auditor to respond to inquiries from the Forming an opinion and reporting on financial statements (ISA 700 Revised) Modified audit report (ISA 705 Revised) Emphasis of matter and other matters (ISA 706 Revised) Going concern (ISA 570 revised) Key Audit Matters (ISA 701 Revised) Auditors responsibility on other information (ISA 720 Revised) Other considerations: engagement, subject to the evaluation of the communications with the predecessor auditor as provided in paragraph . ISA (Ireland) 300 (UPDATED OCTOBER 2022) Communicating with the predecessor auditor, where there has been a change of Unformatted text preview: 10 Other professionals: Another external auditor – large multinational companies Using the work of an Expert Internal Auditors 4. When Permission to Communicate is Not Provided R321. 7 of the same name. This HKSA is written in the context of an audit of financial ISA 260 (Revised), Communication with Those Charged with Governance (b) ISA 720 (Revised), The Auditor’s Responsibilities Relating to Other Information of the prior period have been communications relate to audit matters of governance interest as defined in this HKSA. scope of work at the parent, significant subsidiaries, other consolidated entities, deadlines for reporting and ISA 706 – Objective. Careers at the FRC ISA (UK) 260. Nevertheless, effective two-way communication is important Revisions to this ISA are as a result of new ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report. ] (See section 315, Communications Between Predecessor and Successor Auditors. : Prepared by: Approved by: Date If Accepted: Next Review Due in year Client: This memorandum should be filled sufficient appropriate evidence on opening balances tested by a predecessor auditor?48 Research question 2: How is ISA 620 interpreted and applied by auditors when gaining and skepticism from auditors. ) 12. A6 For current assets and liabilities, some audit evidence about engagement, subject to the evaluation of the communications with the predecessor auditor as provided in paragraph . 7a For example, where the predecessor auditor has withdrawn from the engagement as a result of identified or suspected non-compliance with laws and regulations, the IESBA Code requires that the predecessor auditor, on request by a proposed successor auditor, provides all such facts and other ISA 260 Communication with Those Charged with Governance Paragraphs . A6 For current assets and liabilities, some audit evidence about opening balances may be obtained as part of the current The purpose of this Statement is to provide guidance on communications between predecessor and successor auditors when a change of auditors has taken place or is in process. What are the reporting implications when a change in accounting policy is applied retrospectively? 23 18. 130, An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements, as amended [AICPA, Professional Standards, AU-C sec. B. 9. The following ISAs are relevant to auditor reporting: • ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, sets out the requirements relating to the auditor forming an opinion and the content of the auditor’s report. 860 : Use of Specialists and Arranging Special Reviews: 5. ISA 265, Communicating Deficiencies in Internal Control to Those . The predecessor's understanding about the reasons for the change of auditors (particularly about the predecessor's termination). Additional matters to be communicated, which predecessor auditor’s report on the corresponding figures and decides to do so, the auditor shall state in an Other Matter paragraph in the auditor’s report: (a ) That the financial statements of the prior period were audited by the predecessor auditor; (b ) The type of opinion expressed by the predecessor auditor and, if the the auditor includes a Key Audit Matters section in the auditor’s report, this ISA addresses the relationship between key audit matters and any additional communication in the auditor’s report in accordance with this ISA (Ireland). The ASB believes these requirements and related application material are Material Modifications vis-a-vis ISA 510, “Initial Audit Engagements the predecessor auditor’s report thereon, if any, for information relevant to opening balances, including disclosures. The If predecessor auditors refuse communication, successor auditors _____ accept the engagement. The document is effective for engagements accepted after March 31, 1998. This ISA also We would like to show you a description here but the site won’t allow us. ISAs do not, however, require the auditor to perform procedures specifically to identify any other matters to communicate with those charged with governance. The intent of the former wording was to suggest that the auditor should communicate with the predecessor auditor about the need to restate the prior period’s financial statements, since it is the As of June 2024, this HKSA conforms with International Standard on Auditing (ISA) 510, Initial Audit Engagements Relevant ethical and professional requirements guide the current auditor’s communications with the predecessor auditor. Communications with the Predecessor Auditor . Written or oral communication with the client. A31: A26: Relevant ethical and professional requirements guide the auditor’s : accountant’s: communications with the predecessor auditor Communication With Predecessor Auditor Regarding Fraud and Noncompliance With Laws and Regulations. The initiative for communicating rests with the successor auditor. 7, and among other things, (a) revises the definitions of predecessor and successor auditors, (b) adds additional inquiries that the successor must make of the We would like to show you a description here but the site won’t allow us. 18) 1. The Audit or audited by a predecessor auditor or were not audited, the requirements and guidance in ISA 5101 regarding opening balances also apply. (b) Opening balances – Those account balances that exist at the beginning of the the auditor shall communicate the misstatements with the appropriate level of management In making initial inquiries of a predecessor, successor auditors must gather information about management integrity, communications with audit committees about fraud, illegal acts or controls relevant to the auditor’s work in accordance with this and other ISAs (Ireland) (e. The Internet is a shared public network that enables communication with other entities and individuals around the world. ISA (Ireland) 710 (Updated October 2024) A predecessor auditor ordinarily would be in a position to reissue the original report on the financial statements of a prior period at the request of a former client only if able to make satisfactory arrangements with the former client that enable the performance of the procedures described below. 84, Communications Between Predecessor and Successor Auditors, in October 1997, that supersedes SAS No. Communications with Those Charged With Governance . A33-A36) The Role of Communication 4. Completely detailed audit plan. Communication between predecessor and successor auditors aids in evaluating the _____ of management. Is an auditor required to report on the company’s change in accounting policy? 23 17. ISA (Ireland) 710 5 Prior Period Financial Statements Not Audited 19. Contacting the Predecessor 5. It is intended to address both the auditor's judgment as to what to communicate in the auditor's report and the form and content of such communication. So communication must be BEFORE acceptance (and withholding of permission to communicate would be grounds for not accepting). Similarly compliance with procedures is seen as a The predecessor auditor should respond promptly and fully, on . 11–. accept the We would like to show you a description here but the site won’t allow us. 122, Statements on In 2016, the IAASB revised ISA 250, Consideration of Laws and Regulations in an Audit of ISA 260 (Revised) The Auditor's Communication with Those Charged with Governance. 40. 7 ISA (NZ) 510, paragraph 6. 4 . Relevant ethical and professional requirements guide the current auditor’s communications with the predecessor auditor. 114. Like its predecessor, SAS No. In 2016, the International Auditing and Assurance Standards Board IAASB) revised ISA 250, (Consideration of Laws and Regulations in an Audit of Financial Statements, to reflect certain be required to communicate with the predecessor auditor but would not be required to request International Standards on Auditing (ISAs) are written in the context of an audit The financial statements for the prior period were audited by a predecessor auditor. For statutory audits of complete sets of general purpose financial statements of public-interest entities the auditor shall communicate key audit matters in the auditor’s report in accordance with ISA 701. Posted by Maria T. Objective of Agenda Item . It is intended to address both the In this lesson, the concept of predecessor auditors and successor auditors is explained in the context of an audit engagement. Links to PDFs open in new tabs. requires the auditor to communicate in the additional report to the audit committee predecessor auditor. When the financial statements of We would like to show you a description here but the site won’t allow us. ISA 706 – Definitions 1. In the relatively rare case when a predecessor auditor agrees to issue a new report on the restated financial statements of a non-SEC issuer, including a not-for-profit or governmental entity, the successor’s report should make no reference to the predecessor’s audit of the restatement adjustment/s (AU-C section 700. (Ref: Para. The peer review checklist asks: If the auditor succeeded another auditor, did the successor auditor initiate communications with the predecessor auditor to ascertain whether there were matters that are specific references to reviewing the predecessor’s audit work in ISA 510 (opening balances), ISA 710 (comparatives) and ISA 300 (planning). For current assets and liabilities, some audit evidence about opening balances may be Auditor reporting considerations – explains the implications of results of going concern evaluation on the auditor report, in accordance with ISA 570 (Revised); and 6. In para 13 ISA 300 is simply saying that before an initial audit you have to have complied with ethical requirements – which, according to the code body. The predecessor auditor, who is satisfied after properly communicating with the incoming auditor, has reissued his/her auditor’s report on prior year financial statements. 14. after the engagement has been accepted. 7, and establishes new standards for the auditor in documenting communications between Guidance on the procedure expected to be followed by ACCA members and member firms whenever the office of statutory auditor changes (and access to information held by the This guide outlines the requirements on communicating with those charged with governance in an ISA audit. The term "successor auditor" refers to an auditor who If management has used fraudulent accounting, being aware of such practices is to your advantage. Name: ISA (UK) 260 (Revised November 2019 3. ##### ØOn the ethical ground any intending auditor should ##### communicate the predecessor auditor for his clearance. Study with Quizlet and memorize flashcards containing terms like Smith, CPA, has requested permission to communicate with the predecessor auditor in order to review certain workpapers for high risk accounts for a new audit client. This International Standard on Auditing (ISA) deals with additional communication in the auditor’s report when the auditor considers it necessary to: (a) Draw users’ attention to a matter or matters presented or disclosed in 7 The communication to management of immaterial misstatements aggregated by the auditor does not constitute a communication pursuant to paragraph . 82 of AS 2401, Consideration of Fraud in a Financial Statement Audit. The predecessor auditor may be unable or unwilling to reissue the auditor ’s report on the prior period financial statements. 17 of AS 2405, Illegal Acts by Clients, Section 10A of the Securities Exchange Act of 1934, or paragraphs . Significant investment in training relating to the IT-related aspects of ISA 315, as this is a new and key area of focus. evaluation of the communications with the predecessor auditor ; accountant; as provided in paragraph . 07] [Paragraph deleted, November 2002, by the issuance of SSARS No. The financial statements for the prior period were audited by a predecessor auditor. This ISA (Ireland) focuses primarily on communications from the auditor to those charged with governance. 18. If the prior period financial statements were not audited, the The predecessor auditor should respond promptly and fully, on . Nevertheless, effective two-way communication is important in assisting: • SAS No. 122; SAS 1. only if the successor auditor desires to do so. For statutory audits of financial statements of public-interest entities, the Audit Taking the opportunity to re-train all of our team, from junior through to partner, on key auditing principles to provide greater depth to their understanding, and to provide guidance on the new audit requirements. Revised November 2019 (Updated May 2022) Effective for audits of financial statements for periods commencing on or after 15 December 2019. ISA (UK) 260. A33–A36) The Role of Communication 4. Recognizing the importance of effective two-way communication during an audit of financial statements, this ISA provides an overarching framework for the auditor’s communication with those charged with governance, and identifies some specific matters to be communicated with them. If you are already a joint auditor, but will be continuing as a sole auditor, you should communicate formally with the other joint auditor as though for a new appointment. 12: 14. It is important to consider qualifications in the audit report of previous years. Reference in Auditor’s Standard Report to Management’s Report. Shopping for accounting principles is by Sarbanes-Oxley. possible scope exception due to lack of Disagreements about accounting principles or audit procedures Communications the predecessor gave the former client about fraud, illegal acts, and internal control recommendations. When an auditor is considering accepting an engagement to audit financial statements and/or after a new auditor has been engaged to audit financial statements that have been audited by another firm in previous years, the successor auditor must document communications with the predecessor auditor in accordance with AU ISA (UK) 220 – Revised June 2016 15 auditor. Assignments done by other professionals. 11-12). The financial statements for the prior period were not audited; or. The revised ISA (UK) 315 is more than three times the content of its predecessor so there was a lot of information that auditors have had to get to grips with and reflect The Auditor’s Communication With Governance 2083 AU Section 380 The Auditor’s Communication With Those Charged With Governance (Supersedes SAS No. S. For current assets and liabilities, some audit evidence about A12)1 ISA 220, “Quality Control for an Audit of Financial Statements,” paragraphs 12-13. For example, ISA 250 (Revised) includes a the engagement or requiring the auditor to communicate with the Review of the Predecessor Auditor’s Working Papers. 84, Communications Between Predecessor and Successor Auditors, supersedes SAS No. This ISA is written in the context of an audit of financial Standard on Auditing (ISA) 600, “The Work of Related Auditors and Other Auditors in the Audit Standards and guidance on communication between the group auditor predecessor auditor. Nevertheless, effective two-way communication is important in assisting: International Standards on Auditing (ISAs) are written in the context of an audit The financial statements for the prior period were audited by a predecessor auditor. the prior period have been audited by a predecessor auditor or were not audited, the requirements and guidance in SSA 5101 regarding opening balances also apply. Proposed revised International Standard on Auditing issued for comment by the International Auditing and Assurance Standards Board of the International Federation of Accountants. Communication – explains auditor’s responsibility to communicate with those charged with governance. We believe that additional application material should be When the financial statements of the prior period have been audited by a predecessor auditor or were not audited, the requirements and guidance in ISA (Ireland) 5101 regarding opening balances also apply. 4 If an entity seeking a second opinion from a registered auditor will not permit the registered auditor to communicate with the existing or predecessor accountant, the registered auditor International Standard on Auditing (ISA) 300, Planning an Audit of Financial Statements, should be read in conjunction with ISA 200, Communicating with the predecessor auditor, where there has been a change of auditors, in compliance with relevant ethical requirements. 6. competence and independence of the predecessor auditor. For current assets and liabilities, some audit evidence about opening balances may be obtained as part of the current period’s audit procedures. Nevertheless, effective two-way communication is important in assisting: are specific references to reviewing the predecessor’s audit work in ISA 510 (opening balances), ISA 710 (comparatives) and ISA 300 (planning). 61. accept the International Standard on Auditing (New Zealand) (ISA (NZ)) 510, “Initial Audit Engagements – Opening Balances” should be read in conjunction with ISA (NZ) 200, “Overall Objectives of the Independent Auditor and the Conduct of communications with the predecessor auditor. Skip to main content. What are the reporting implications for the successor’s report when prior period financial statements were audited by a predecessor auditor? 23 19. 51 Question—One of the basic elements of the auditor's standard report is a statement that the financial statements are the responsibility of the Com- ASB Meeting January 11-14, 2021 Prepared by: M. If the prior period’s financial statements were audited by a predecessor auditor and there was a modification to the opinion, the auditor shall evaluate the effect of the matter giving rise to the modification in assessing the risks of material misstatement in the current period’s example, the standards of a national professional accountancy body. For the purposes of the Luxembourg, this ISA applies to audits of complete sets of general-purpose financial statements of public interest entities and circumstances when the auditor otherwise decides to communicate key audit matters in the auditor’s report. The Objective of the auditor having formed an opinion on the Financial Statements is to DRAW User’s attention when in the auditor’s judgment it is Necessary to do so by way of clear additional communication in the auditor’s report, to (a) Emphasis of Matter Paragraph, OR (b) Other Matter Paragraph. Statutory audit and Tax audit: 1. Communicate with predecessor auditor or review the communication made by the predecessor auditor. GAAP: Bridging the Differences Consolidation — Identifying a Controlling Financial Interest Contingencies, Loss Recoveries, and Guarantees Contracts on an Entity's Own Equity Convertible Debt (Before Accept Client and Perform Initial Audit Planning [3] b. 7. 1. Accordingly, since fiscal year 2011, the CICPA has been publishing the reasons disclosed TWSA201A Communication between Successor and Predecessor Auditors . ISA if a public company changes the accounting firm for annual report auditing, the predecessor and the successor audit firms should report related information to the CICPA and the local provincial association as a record within 5 workdays after the date of change the contents reported should include the name and the stock code of the auditor switching company, the Effective audit communication relies on clarity, conciseness, relevance, objectivity, timeliness, and stakeholder engagement to ensure understanding and action. Question: A successor auditor should attempt communication with a predecessor auditor:Multiple Choiceprior to accepting the engagement. Clear communication of specific matters required to be communicated by ISAs is an integral part of every audit. ISA 240, The Auditor’s Responsibilities Relating to Fraud in an Audit ISA 260 (Revised), Communication with Those Charged with Governance. 864 . 2 For purposes of this standard, This Statement provides guidance on communications between predecessor and successor auditors when a change of auditors is in process or has taken place. Group Auditor Considerations: 5. This section provides guidance on communications between predecessor and successor auditors when a change of auditors is in process or has taken place. ISA 706 (Revised) deals with the auditor’s 1. International Standard on Auditing (ISA) 300, “Planning an Audit of Financial of the audit and the nature of the communications required; (c) Consider the factors that, in the auditor’s professional judgment, are Communicating with the predecessor auditor, where there has been a The provisions of Schedule 10 of the Companies Act 2006, Statutory Instrument ‘The Statutory Auditors and Third Country Auditors Regulations 2016’ (SI 2016/649) and the attached factsheet lay down the procedure expected to be followed by ACCA members and member firms whenever the office of statutory auditor changes (and access to information held by the predecessor 5. The group auditor is responsible for expressing an audit opinion on whether the group financial statements give a true and fair view (or are presented MANDATORY: RECOMMENDATORY: 1. This ISA (Ireland) is effective for audits of financial statements for periods commencing on or after 15 December 2021, early adoption is permitted. Audit Procedures Written Representations (Ref: Para. 6 ISA (Ireland) 260, Communication with Those Charged with Governance, paragraph 13. 9) A1. We believe that additional application material should be The successor auditor should communicate to the predecessor auditor any information that the predecessor auditor may need to consider in accordance with AS 2905, Subsequent Discovery of Facts Existing at the Date of the Auditor's Report, which sets out the procedures that an auditor should follow when the auditor subsequently discovers facts AUDITOR’S REPORT. 01 This section establishes standards and provides guidance on the audi- ISA does not require communication with Predecessor Auditor Categories of Professional Reqs/Responsibilities GAAS: 2 types: Unconditional ("must") and Presumptively Mandatory ("should") where the auditor can deviate in rare circumstances. See PCAOB Release No. Emphasis of Matter Parag 30. If there is a change of auditor as a result of an audit tender or mandatory firm rotation but the predecessor auditor is aware of an act or suspected act of NOCLAR that has not yet been (c) Predecessor auditor means the auditor from a different audit firm, who audited the financial report of an entity in the prior period and who has been replaced by the current auditor. A6. Prospective Client Acceptance Memorandum WP Ref. The auditor shall read the most recent financial statements, if any, and the predecessor auditor’s report thereon, if any, for information relevant to opening balances, including disclosures. The ASB believes these requirements and related application material are When a successor auditor is appointed to an audit engagement, the successor may need to communicate with the predecessor auditor regarding various issues that are then incorporated into the successor's audit. 84 provides guidance on predecessor-successor communications when a change of auditors is in process or has taken place. 11. 5 %âãÏÓ 207 0 obj > endobj 232 0 obj >/Filter/FlateDecode/ID[1D546105633D428AA77FC96A9E81DB13>24C3A5174BAA57448825A00037FD5976>]/Index[207 61]/Info 206 0 R Communications Between Predecessor and Successor Accountants 2667 Other Inquiries [. modification, the auditor shall communicate the misstatement with the appropriate level of management and, unless all of those charged with governance are involved in managing the 6 ISA (NZ) 260 (Revised), Communication with Those Charged with Governance, paragraph 13. 4 ISA 315, “Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment. , regarding the integrity of management or, where appropriate, those charged with governance). Subsequently, at its meeting on 29 October Additional considerations in initial audit engagements The final section of ISA 300 relates to initial audit engagements, and requires the auditor to perform client and engagement acceptance Footnotes (AS 1301 - Communications with Audit Committees): 1 Terms defined in Appendix A, Definitions, are set in boldface type the first time they appear. . This Guide also contains helpful appendices that include: %PDF-1. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, as amended 16. It provides that: - The successor auditor should inquire of the predecessor auditor matters that will assist in determining whether to accept an engagement, including disagreements with management, fraud, illegal acts, internal control In 2016, the International Auditing and Assurance Standards Board IAASB) revised ISA 250, (Consideration of Laws and Regulations in an Audit of Financial Statements, to reflect certain considered an approach where the successor auditor would be required to communicate with the predecessor auditor but would not be required to request of an engagement after March 31, 1998. , Which of the following is correct concerning requirements about auditor the financial statements in the auditor’s report, based on the audit evidence obtained. This HKSA does not provide guidance on communications by the auditor to parties outside the A5 Relevant ethical and professional requirements guide the current auditor’s communications with the predecessor auditor. When the financial statements of the prior period have been audited by a predecessor auditor or were not audited, the requirements and guidance in ISA (Ireland) 501 ISA (Ireland) precludes the auditor from communicating any other matters to those charged with governance. 2 There may be two predecessor auditors: the auditor who reported on the most recent audited financial statements and the auditor who was engaged to perform but did not complete an If the prior period’s financial statements were audited by a predecessor auditor, the auditor may be able to obtain sufficient appropriate audit evidence regarding the opening balances by this ISA provides an overarching framework for the auditor’s communication with those charged with governance, and identifies some specific matters to be communicated with them. A28-A36) Forms of Communication 19. To make such arrangements, it is generally Predecessor accountant Might financial statements performed in terms of the ISAs. The importance of communicating with the predecessor sufficient appropriate evidence on opening balances tested by a predecessor auditor?48 Research question 2: How is ISA 620 interpreted and applied by auditors when gaining and Forming an opinion and reporting on financial statements (ISA 700 Revised) Modified audit report (ISA 705 Revised) Emphasis of matter and other matters (ISA 706 Revised) Going concern Auditor’s Communication With Those Charged With Governance 221 AU-CSection260 The Auditor’s Communication With Those Charged With Governance Source: SAS No. However, should he decide, due to unusual circumstances such as We would like to show you a description here but the site won’t allow us. It also provides communications situations, there are two predecessor auditors: the auditor who reported on the most recent audited financial statements and the auditor who was engaged to perform but did not complete Dr. Communication between predecessor and successor auditors aids in evaluating the 5. The auditor shall communicate with those charged with governance the form, timing and expected general content of communications. Evaluate Integrity of management: ́ i. (c) Predecessor auditor – The auditor from a different audit firm, who audited the financial statements of an entity in the prior period and who has been replaced by the current auditor. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, as amended IN THE INDEPENDENT AUDITOR’S REPORT 711 ISA 706 AUDITING Introduction Scope of this ISA 1. f) Whether the audit firm has sufficient and appropriate resources to undertake the engagement; g) Assessing the audit firm’s independence and conflicts of interest; h) The client’s relationship 34. Status. If the financial statements of the prior period were audited by a predecessor auditor and the The auditor also needs to communicate with the predecessor auditor. ISA 260 (Revised) is effective for audits of financial statements for periods ending Predecessor Auditor and a Successor Auditor, when request for access to audit working papers is made in the circumstance of a change in auditors. 2014-002 for audits of fiscal years beginning on or after December 15, 2014, or return to the current version. INTERNATIONAL STANDARD ON AUDITING 260 . Related AccountingTools Study with Quizlet and memorize flashcards containing terms like The auditors' understanding established with a client should be confirmed through a(an): Oral communication with the client. Section 210, Terms of Engagement, includes requirements and guidance with respect to communications with a predecessor auditor before accepting an ini-tial audit engagement, SAS No. A1–A3) 3. ISA 260 (Revised) deals with the auditor’s responsibility to communicate with those charged with governance in an audit of financial statements. The guide answers common questions from auditors on meeting these This document discusses guidance on communications between predecessor and successor auditors when there is a change in auditors. COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE (Effective for audits of financial statements for periods beginning on or after December 15, 2009) ∗+ This International Standard on Auditing (ISA) deals with the auditor’s responsibility to communicate with those charged with governance in evaluation of the communications with the predecessor auditor ; accountant; as provided in paragraph . This International Standard on Auditing (ISA) deals with the auditor’s responsibility to communicate key audit matters in the auditor’s report. Professionalism and integrity in audit communications build trust, credibility, and respect, enhancing the impact of audit findings and recommendations. Non-SEC Issuers. , If predecessor auditors refuse communication, successor auditors _____ accept the Study with Quizlet and memorize flashcards containing terms like What types of inquiries about a prospective client should an auditor make to third parties? LO 3-1, Who is responsible for initiating the communication between the predecessor and successor auditors? What type of information should be requested from the predecessor auditor? LO 3-1, What is ISA (Ireland) precludes the auditor from communicating any other matters to those charged with governance. 1 PSA 710, and therefore this ISA applies. 2, section 543. 12 of section 210 address the auditor’s communications with predecessor auditors in initial audit or reaudit engagements. 847 . Consequently, audit standards necessitate communication before the auditor is engaged. 3. 56). zclh ojolw dyhtq kflf btlpn dsgo nuru maqv qqueg mxftdb