The rules have changed for firms that perform interim reviews and year-end audits of client financial statements. Through 2009, interim reviews of nonissuers followed Statement on Standards for Accounting and Review Services (SSARS) for reviews and Statement on Auditing Standards for the year-end audit. The CPA should have sufficient knowledge of the entity's business and its internal controls since both relate to the preparation of annual and interim financial information. If the CPA is also the continuing auditor, the additional work required is likely to be limited to an understanding of the controls applicable to interim reporting. If the CPA did not perform the most recent year-end audit, then he or she must communicate with the predecessor auditor and make certain inquiries prior ...
Most auditors surveyed were aware of their professional responsibility as a successor auditor to communicate with the predecessor auditor, but few followed the timing requirement of Statement on Auditing Standards no. 7 'Communications Between Predecessor and Successor Auditors.' Certain communication is supposed to occur prior to accepting the engagement. Compliance with this standard is complicated by the fact that clients are often the accepting party, not auditors. A number of auditors also did not inquire into managerial integrity or the reason for change in auditors.
...Applicability of Standard--1-4 Auditor's Objective in an Engagement to Report on Whether ...315, Communications Between Predecessor and Successor Auditors. a. Comply with paragraphs ...
...84, Communications Between Predecessor and Successor Auditors, as amended, except paragra...
INTRODUCTION. This paper examines auditor's findings when audit firm rotation is predetermin..., and then the behavior of the predecessor and successor auditor is contrasted. During the Au...
... .01-.02, Dating of the Independent Auditor's Report (AICPA, Professional Standards, vol. 1, A... prior period have been audited by a predecessor auditor or were not audited. . 6. The proposed SAS...
Companies change auditors for a variety of reasons. At one end of the continuum, companies change auditors to improve operating performance. At the other, managers change auditors to enhance their own position. If auditor changes are driven by managerial opportunism, companies may increase their level of earnings management after the change. In this paper we reexamine prior research in earnings management that surround auditor changes (DeFond and Subramanyam, 1998) and extend prior work by examining earnings management and auditor changes while controlling for prior audit opinion. We find that, on average, earnings management does not increase following auditor changes. We do find, however, that the level of earnings management is larger for companies that switch from Big Six to non-Big...
... between the audit opinions of predecessor and successor auditors. Krishnan and Stephens (199...
Both engagement and disengagement letters should be standard practice when an accounting practice intends to initiate or terminate a client relationship. Engagement letters should be sent prior to the engagement and are designed to establish a clear understanding of the scope and nature of services to be provided to the client. Disengagement letters are sent by the accounting firm to the client to unilaterally indicate a termination of services. Disengagement letters can provide CPAs with a valuable tool to reduce potential legal liability. It is important to always maintain a professional attitude in the letter and conclude on as positive a note as possible. Those sending out the letter should sleep on it and reread it the next day before sending it out. The CPA firm should consider wh...
... the CPAs will use specialists, internal auditors, or the involvement of the predecessor auditor, an...
... 1 sections 530, Dating of the Independent Auditor's Report, as amended, 560, Subsequent Events, as a... After the Report Release Date/15-18 Predecessor Auditor's Reissuance of the Auditor's Report in Co...
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