Prior to the Acceptance of an Audit Engagement with a Client

question 12

Multiple Choice

Prior to the acceptance of an audit engagement with a client who has terminated the services of the previous auditor, the proposed auditor should:

• A) contact the previous auditor without advising the prospective client and request a complete report of the
• Circumstances leading to the termination with the understanding that all information disclosed will be kept confidential.
• B) accept the engagement without contacting the previous auditor, since the proposed auditor can include audit procedures to verify the reason given by the client for the termination.
• C) not communicate with the previous auditor, because this would in effect be asking the auditor to violate the confidential relationship between auditor and client.
• D) advise the client of the intention to contact the previous auditor and request permission for the contact.

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Definitions:

Mutually Beneficial Relationship

A relationship in which all parties involved gain benefits or advantages from their association with each other.

Equity Theory

A theory of motivation that suggests individuals assess their relationships in terms of inputs, outputs, and the comparison with others, seeking fairness in exchanges.

Two-Factor Theory Of Emotion

A psychological theory proposing that emotions are based on physiological arousal and cognitive labeling of the arousal based on environmental cues.

Passionate Love

An intense emotional state characterized by a powerful desire for another person, often accompanied by physiological arousal.