Other audit: Client acceptance

Question 1

Audit fee

Answer 1

Consider:

staff; number, seniority, skills, time

audit risk; inherent, control, detection

director/shareholder integrity

ethical issues

deadlines and expenses

lowballing - creates risk that quality of work will not be sufficient

Question 2

Communication between old and new auditors

Answer 2

New auditor should request information which may influence decision whether to accept:

unpaid fees

differences of opinion between auditor and mgmt

unlawful actions

Old auditor should:

obtain client permission before disclosing confidential information

either confirm no issues or explain issues
state if the client refused for information to be disclosed

New auditor should then:

assume that no response means no adverse comments

consider any information when deciding whether to accept

Question 3

Appointment - who appoints

Answer 3

Auditor appointed by:

Shareholders:
through ordinary resolution, no more than 28 days after FS filing date

Directors:
after auditor resigns or before first AGM when audit required

only if casual vacancy or first appointment

Secretary of State:
if no auditor appointed

Question 4

Removal - who decides, auditor’s rights

Answer 4

By shareholders through ordinary resolution

Auditor produces statement of circumstance

Auditor’s rights:

Speak at AGM

Circulate written reps to shareholders

Question 5

Resignation by auditor - requirements/rights

Answer 5

Auditor gives written notice and produces statement of circumstance - can state no circumstance if unlisted

Auditor’s rights:

Request an AGM

Speak and circulate SoC to shareholders

Question 6

Not seeking reappointment

Answer 6

Produce SoC - listed client only