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ZZZZ Best Case Assignment #2
Question 1: 15 points
AU Section 315 Communications Between Predecessor and Successor Auditors .01-.13Using 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 supposed 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.
The first thing E&W should have done, as the successor auditor, was to postpone accepting the engagement until the communications in paragraphs .07 through .10 have been evaluated. (AU
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There is no record that ZZZZ Best management forced Greenspan to sign a confidentiality agreement, so this would not be a factor in E&W’s ultimate decision to work with ZZZZ Best.
AU 315 .09 specifies the type of information inquiries that a successor auditor would make to a predecessor auditor. This type of information would help the successor auditor access the overall integrity of the potential client. Referring to the ZZZZ Best Case, there was no information that E&W could have gathered from Greenspan that would have shown a negative light on the integrity of ZZZZ Best Management. Overall, it is clear from reading the case that E&W did not put much emphasis on gathering information from Greenspan since, at that particular time, the company had a good reputation. Greenspan had been deceived by his former client, so the potential information would have been highly unreliable.
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

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