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Q) Which of the following statements is TRUE in relation to Flute Co being a new audit client of Woodwind & Co?
1) Inherent risk is increased as the firm has no cumulative knowledge or experience of Flute Co.
2) The auditor may not be competent to perform the audit and should consider resigning.
3) The auditor should contact the previous auditor to ask if there are any professional matters of which they should be aware.
4) The auditor will need to increase the quality management procedures performed due to the increased risk. ?
Hello tutor!!
I choose option 3 which is wrong because I thought auditor might contact with previous auditor to get some prior working papers of new client but they are saying something new in option 4 which I am not understanding.
Could you please explain me what are they saying in option 4 and furthermore why option 4 is correct ?
Thank you.Making enquiry of the predecessor is a professional requirement BEFORE accepting appointment… so is too late now.
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