Final answer:
The new audit firm, Touche Ross, in 1997 would be required to take additional steps including understanding the client, assessing risks, reviewing financials and internal controls, and engaging in professional skepticism. Communication with the predecessor auditor and understanding regulatory and industry specifics are also necessary.
Step-by-step explanation:
When Touche Ross became the new audit firm in 1997, additional steps required during the audit process would likely include understanding the new client, assessing the risks of material misstatement, and obtaining sufficient appropriate audit evidence. The auditor should also communicate with the predecessor auditor in accordance with auditing standards, perform a thorough review of the company’s financial statements and internal controls, and assess any areas where there may be an increased risk of fraud or error.
It is also essential that the new audit firm establishes an understanding of the business and industry of the client, including the regulatory environment, and identifies any changes in accounting policies and practices that could impact the financial statements. Evaluation of the company’s governance structure and engaging in professional skepticism throughout the audit process are also critical steps that should be taken.