board of directors of Danson Company limited asked Jameel & Soften, a Private Auditing Firm to audit Danson’s financial statements for the year ended 31st December 2019. Jameel & Soften explained the need to make an enquiry of the predecessor auditor and requested permission to do so. Danson’s board of directors refused to honor the request on the grounds that relations with the predecessor had deteriorated so significantly that Jameel & Soften would receive biased and defamatory information from the predecessor. Required a. What is the purpose of the communication between the successor and the predecessor auditor? b. How does communication aid in assessing audit risk? c. What position should Jameel & Soften assume in the present situation? How should they respond to Danson’s refusal to permit communication with the predecessor auditor?
The board of directors of Danson Company limited asked Jameel & Soften, a Private Auditing
Firm to audit Danson’s financial statements for the year ended 31st December 2019. Jameel &
Soften explained the need to make an enquiry of the predecessor auditor and requested
permission to do so. Danson’s board of directors refused to honor the request on the grounds that
relations with the predecessor had deteriorated so significantly that Jameel & Soften would
receive biased and defamatory information from the predecessor.
Required
a. What is the purpose of the communication between the successor and the predecessor
auditor?
b. How does communication aid in assessing audit risk?
c. What position should Jameel & Soften assume in the present situation? How should they
respond to Danson’s refusal to permit communication with the predecessor auditor?
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