The Purpose of the Requirement in Having Communication Between the Predecessor

question 95

Multiple Choice

The purpose of the requirement in having communication between the predecessor and successor auditors is to

• A) allow the predecessor to disclose information which would otherwise be confidential.
• B) help the successor auditor to evaluate whether to accept the engagement.
• C) help the client by facilitating the change of auditors.
• D) ensure the predecessor collects all unpaid fees prior to a change in auditor.

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Definitions:

Replaceable Rules

A concept in corporate law allowing companies to either adopt the default rules set by legislation for internal governance or replace them with their own customized rules.

Corporations Act

A major legislation governing corporate activities in certain jurisdictions, such as the Corporations Act 2001 in Australia.

Dividend

A portion of a company's earnings, decided by the board of directors, to be distributed among shareholders.

Pre-acquisition Equity

The equity interest that an acquirer holds in an acquiree before the business combination, accounted for in the acquisition process.