Section 320 – Professional Appointment

Fact

When a new auditor (successor) is proposed, he must ask the client for permission to communicate with the existing (predecessor) auditor before accepting. 

Elaboration

Purpose:

• To know if there are professional reasons (e.g. disputes, unpaid fees, integrity issues) why the client is changing auditors.
• To help the new auditor decide whether it is safe and ethical to accept the engagement.

Existing auditor must also ask the client for permission before giving detailed information to the new auditor.

Example

• A client suddenly changes auditor every year and has a history of not paying fees.
• When the new auditor communicates with the old auditor, this issue is revealed.
• New auditor may then refuse the appointment.