3.

1 Client Acceptance and Continuance

 New client - Successor makes inquiries to predecessor auditor before accepting the
engagement with the authorization of the new client (Client Confidentiality) about the:
o Integrity of the Management
o Disagreements with the Management (audit related)
o Communication about fraud with those TCG
o Communications regarding internal issues (deficiencies vs. material weakness)
o Predecessor’s understanding of why the change of auditor’s occurred. (fee issue or
other reasons)
This may or may not be provided to you by the predecessor auditor or receive information
what you need to consider for client acceptance.
 Obtain and review all available financial statements – usually easily to obtain for public
companies thru SEC. If they did not give to you in the appropriate time and manner, should raise
some red flags on reasons why the change of new auditor. No answer does not mean not giving
you red flags.
 Talk with third parties regarding integrities – usually referring to bankers that might know
some information on the company.
 Special Attention on Audit Risk - that make could go wrong on giving on opinion
 Independence Issues
 Violate with any regulatory requirement of Code of Professional Conduct-