A Successor Auditor Should Always Make Inquiries of the Predecessor

question 55

Multiple Choice

A successor auditor should always make inquiries of the predecessor auditor before accepting an audit engagement.The successor should specifically inquire about the predecessor's:

• A)Awareness of the consistency in the application of generally accepted accounting principles between accounting periods.
• B)Evaluation of all matters of continuing accounting significance.
• C)Opinion of any subsequent events occurring since the predecessor's audit report was issued.
• D)Understanding as to the reasons for the change of auditors.

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Definitions:

Trademarks

Symbols, names, phrases, or logos legally registered or established by use as representing a company or product.

Unrealized Inventory Profits

Profits that have been recorded on paper due to an increase in inventory value but have not been realized through sales.

Significant Influence

The power to participate in the financial and operating policy decisions of an investee, without having control over those policies.

Preferred Share Issue

The process of offering preferred shares to investors, which are stock shares that have priority over common shares in dividend payments and asset liquidation, but usually do not have voting rights.