Question

Smith, CPA has requested permission to communicate with the predecessor auditor in order to review certain workpapers for high risk accounts for a new audit client. The new audit client's refusal to allow this communication to occur would impact Rodgers decision concerning:

A) the auditor's ability to design audit tests.
B) possible scope exception due to lack of access.
C) the desirability of accepting the prospective engagement.
D) violation of the GAAP rules concerning consistency and comparability of financial information.

Answer 1

The refusal to allow communication with the predecessor auditor and access to workpapers can impact the auditor's decision regarding scope exceptions.

Step-by-step explanation:

If the new audit client refuses to allow Smith, CPA to communicate with the predecessor auditor and review the workpapers for high risk accounts, it would impact the auditor's decision concerning possible scope exception due to lack of access.

When conducting an audit, it is crucial for the auditor to have access to all relevant information, including the workpapers prepared by the predecessor auditor. These workpapers provide valuable insights into the audit risks and help the auditor in designing appropriate audit tests. If the new client refuses access to these workpapers, it may hinder the auditor's ability to assess the completeness and accuracy of the financial statements, potentially leading to a scope exception.

Therefore, the refusal to allow communication with the predecessor auditor and access to workpapers directly affects the auditor's ability to fulfill their responsibilities and may have implications on the scope of the audit engagement.