The Purpose of Requiring Communication Between the Predecessor and Successor

question 66

Multiple Choice

The purpose of requiring communication between the predecessor and successor auditor is to:

• A) help the successor audit evaluate whether to accept the engagement.
• B) help the client by facilitating the change of auditors.
• C) ensure that information which is provided to ASIC will be accurate.
• D) allow the predecessor to disclose information which would otherwise be confidential.

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Definitions:

Asset Account

An account that represents a resource owned or controlled by a business, expected to provide future economic benefits.

Debit

An entry recorded on the left side of an account in double-entry bookkeeping that increases asset or expense accounts, or decreases liability, equity, or revenue accounts.

Liability Account

An accounting record of obligations or debts that a company owes to others, typically outside of the company.

Increase

An upward adjustment or growth in value, quantity, or size.