Communications between Predecessor and Successor Auditors: Assignment

822 Words Nov 11th, 2008 4 Pages
Question 1: 15 points
AU Section 315 Communications Between Predecessor and Successor Auditors .01-.13
Using the facts from the ZZZZ Best case and professional guidance from AU Section 315, explain the following:

A. As the successor auditor, what was E&W suppose to do before they accepted ZZZZ Best as an audit client in regards to Greenspan? Summarize in enough detail Au 315.03-.06. In your answer give and support your opinion as to whether or not E&W violated these paragraphs and if you can prove it as a fact. As the successor auditor (an auditor considering accepting an engagement to audit financial statements), Ernst & Whinney was supposed to contact George Greenspan for information on ZZZZ Best prior to accepting them as a
…show more content…
Ernst & Whinney were so caught up with the notion of having a relationship with such a high-profile client that they did not follow proper procedure according to Generally Accepted Auditing Standards (GAAS). Additionally, we do not believe this claim to be fact as there is no proof to corroborate with either party’s story.

B. Why does a successor auditor need to contact the predecessor auditor? What could the predecessor auditor tell them? Summarize Au 315.07-.09.
Did Greenspan know anything about ZZZZ Best that might influence E&W’s decision to accept ZZZZ Best as a client? Defend your opinion with information from the case.

C. As the predecessor auditor to Price Waterhouse, did E&W follow the professional standards in paragraphs .03-.10 in their communications with Price Waterhouse? In your answer using guidance and details from the case, explain what E&W was supposed to do and what they did do (did they follow the standard or violate a part of the standard guidance? If so, then which part?). Especially address under what circumstances is a predecessor auditor allowed to give a limited response and what limited response is allowed by the standards in paragraph .10. What does a limited response mean to the successor auditor?

D. Did Price Waterhouse as the successor auditor follow the substance of the standard? Did they do what they should have done or what the standard allowed
Open Document