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Hi Mike
June 2011 Wexford“which I believe is an existing audit client of your firm. For this reason we require that audit procedures do not include reading the minutes of board meetings, as we have been discussing confidential matters of this potential acquisition”
does this mean that Wexford will not gaive any SAE of minutes to board meetings. Although auditors has the right to access to all relevant info, so if wexford still does not agree then this engagement should not be accepted?
thanks
What’s SAE?
If any client seeks to restrict the scope of the auditors’ work then, dependent upon the reason and the materiality, the auditor must seriously consider resigning
It could possibly be that the audit opinion will be qualified on the grounds of a limitation of scope but that’s unlikely. A limitation qualification is more applicable where evidence doesn’t exist where you had expected that it would exist (or where it doesn’t exist and you couldn’t have expected it to exist)
A restriction imposed by the client is not acceptable. All audit work involves access to confidential material so a bit more confidential material within the board minutes is just that – a bit more confidential material
If, as in this case, the directors are imposing a limitation of access to records before we are even appointed then, as you so rightly suggest, the invitation to be nominated should not be accepted. Before that refusal to be nominated, the proposed auditors (us!) should seek to reassure the prospective new client’s directors that they have nothing to be concerned about and that we, and all our members of staff, are fully acquainted with the need for the strictest confidence with reference to client matters. If they will not be reassured, then don’t accept
Sufficent appropriate evidence.
So let’s say the audit client restricts giving the audit firm records of board meetings but they were already been appointed and are existing clients. What will the audit firm then do?Thanks
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