Question

B&M auditors have been accepted as the auditors of World Wide Widgets (3W). What are B&M's responsibilities with regard to contacting 3W's predecessor auditors?

A) If 3W had a disagreement with its predecessor auditors, B&M should not contact the predecessor auditors.
B) B&M is not required to attempt communication with the predecessor auditors under any circumstances.
C) B&M should attempt communications with the predecessor auditors and ask if they had any accounting policy disagreements with 3W.
D) It would be unethical for B&M to ask the predecessor auditors about the integrity of 3W's management.

Answer 1

B&M auditors must attempt communication with World Wide Widgets' predecessor auditors to inquire about any accounting policy disagreements or other significant matters that might affect the audit according to auditing standards.

Step-by-step explanation:

The question pertains to the ethical and professional responsibilities of B&M auditors when they become the new auditors for World Wide Widgets (3W), specifically regarding their duty to communicate with 3W's predecessor auditors. According to professional standards, when a new auditor is appointed, it is their responsibility to attempt to communicate with the predecessor auditors. This communication is important to understand any potential issues that might impact the audit, such as disagreements on accounting policies or concerns about the integrity of management.

In this scenario, the correct answer is C) B&M should attempt communications with the predecessor auditors and ask if they had any accounting policy disagreements with 3W. This is in accordance with auditing standards which require incoming auditors to inquire about reasons that might affect their decision to accept the client, including understanding any disputes over accounting principles or practices, financial statement disclosures, and other matters that could have a bearing on the audit.