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sir,
-does client assessment same thing as client acceptance procedures? ,-what does professional clearance means?
-and, why engagement letter is addressed to directors rather than shareholders (as shareholders appoint auditors to work on their behalf)
Client assessment is the same as client acceptance. You are assessing whether you want them a a client.
Professional clearance is is not asking for permission to take over the predecessor’s client. The purpose of writing to the outgoing auditor is to find out if there is any reason why you should not take on the client.
The shareholders have to appoint the auditor, but the contract is with the company and the audit fee is paid by the company. Like any other important contract, the engagement letter would be sent to the board for their agreement.
Sir, the ‘professional clearance’ term is now changed or removed right? The reason I ask this is because, I found some questions mentioning ‘Professional clearance’ but I can not find this term on the textbook of BPP?
Welcome to my AA forum!
The phrases “professional clearance” and “professional etiquette” are still used in practice to mean the process of communication between a nominee professional accountant/auditor and the existing professional accountant/auditor. However, the process for changes in professional appointments is an ethical requirement and these terms are misleading – and therefore discouraged for exams.
“Clearance” might suggest that the existing accountant gives some permission or clearance for the nominee to takeover the appointment – but an existing accountant cannot prevent a change in appointment – there is no “permission” that they can withhold.
In a similar vein “Etiquette” suggests that these communications are a “mere courtesy” – but they are not. You may find this informative https://www.accaglobal.com/content/dam/ACCA_Global/Technical/audit/client-engagement-2013.pdf
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