Question

Explain whether the auditor should proceed with conducting an audit if information received from the former auditor has significant negative information about circumstances that would require special attention.

Answer 1

Explanation

The coming auditor can proceed with conducting the Audit of an organisation even if information received from the former auditor has significant negative information about circumstances that could required special attention.

The auditor must keep in mind the following points while auditing financial statements of the organisation

• Coming Auditor has to identify whether the organisation is involved in any kind of fraud activities. If organisation is found involved in tax evasion activities than the auditor must ask for explanatory statement from those charged with governance and management and should suggest them to disclose errors in filing tax returns to the tax authorities.
• The auditor must prepare a questionnaire and circulate it among the management, questionnaire must involve such questions that will disclose the weakness of internal control system of the organisation, which will help the auditor to identify the areas where he need to pay special attention.
• Thec auditor should work with due diligence and must apply substantive procedure,analytical procedure to audit the circumstances with negative information by the former auditor.
• article assistant and engagement team otherm who are not auditors must not get involved in the areas which are identified as negative by the former auditor. These should be audited only by qualified chartered accountant proffessional.

It can be concluded that coming auditor has to pay special attention to these matters.