Meaning: This occurs when a company replaces its existing auditor with another auditor.
The proposed auditor should investigate the reasons for the change and communicate with the existing auditor through the appropriate professional process before deciding whether to accept. MIA highlights this communication as an important part of client acceptance. Malaysian Institute of Accountants (MIA)
| Action | Explanation | Example |
|---|---|---|
| Ask why the auditor is being changed | Establish whether the reason is routine or raises concerns. | The company needs a firm with more branches, or it disagrees with an accounting adjustment. |
| Seek permission for communication | Arrange appropriate authorisation to discuss relevant client matters with the existing auditor. | The client authorises the previous auditor to respond to professional enquiries. |
| Communicate with the existing auditor | Enquire about matters relevant to accepting the appointment. | Ask about disagreements, restricted access to records or concerns about management’s integrity. |
| Evaluate the information | Consider whether identified matters affect independence, integrity or the ability to perform the audit. | Management previously refused to correct a significant overstatement of inventory. |
| Decide whether to accept | Make and document an informed acceptance decision. | The firm declines because serious integrity concerns remain unresolved. |
If the client refuses permission for communication, the proposed auditor should carefully consider that refusal when deciding whether to accept. icaew.com
Example: ABC Sdn. Bhd. changes auditors because the previous auditor insisted on recognising an impairment loss. The proposed auditor should investigate whether management is seeking an auditor who will accept inappropriate accounting.
Important distinction: A change of auditor does not automatically mean fraud has occurred. There may be legitimate commercial or operational reasons.
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