Discuss communications between predecessor and successor auditors.
What will be an ideal response?
Successor auditors are required to make certain enquiries of predecessor auditors when a new client is
obtained (e.g., Rule 302 of Professional Conduct of CPA Ontario). Rule 302 and similar rules of other
accounting bodies apply to all public accounting engagements, including compilation and review work.
Interpretation to Rule 302 gives advice to PAs when communicating with the predecessor. First, the
successor public accountant (PA) should ask the new client to notify the predecessor (incumbent) PA of
the proposed change. The successor should then ask the predecessor "whether there are any circumstances
that should be taken in account which might influence the potential successors' decision whether to accept
the appointment, "per Interpretation 302. Normally, the successor should wait for the reply before
commencing work for the new client. The interpretation also requires the predecessor to reply promptly.
When enquiries are made, the successor must have the client's permission for the predecessor to disclose
confidential information. When confidentiality is in doubt, legal advice should be obtained. The effort the
predecessor should make in supplying information to the successor is an important issue. The
interpretation suggests that, as a minimum, "reasonable information about the work being assumed"
should be discussed, and it then gives advice on what constitutes "reasonable."
In addition to the rules of professional conduct, PAs should be aware of any federal and provincial
legislation, including securities legislation, regulating changes in professional appointments.
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