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audit firm

ACCEPTANCE OF CLIENT RELATIONSHIPS AND SPECIFIC ENGAGEMENTS

Acceptance of new client that is currently audited by another professional firm

(Applicable to Client Acceptance only)

The Firm, when asked to replace another professional firm shall determine whether there are any reasons, professional or otherwise, for not accepting the engagement.

The Firm shall require direct communication with the existing accountant to establish the facts and circumstances regarding the proposed change so that the Firm can decide whether it would be appropriate to accept the engagement.

The Firm shall ask the existing accountant to provide known information on any facts or circumstances that, in the existing accountant’s opinion, the Firm needs to be aware of before deciding whether to accept the engagement.

Bestar shall send a professional clearance request letter to the existing accountant and obtain a reply in writing, indicating that there are no professional or other reasons that might negatively influence Bestar’s decision whether to accept the engagement.

If the Firm does not receive a reply from the existing accountant within a reasonable time and the Firm has no reason to believe that there are any exceptional circumstances surrounding the proposed change, the Firm shall use such other reasonable means to communicate with the existing accountant.

If the Firm is unable to obtain a satisfactory outcome pursuant to the preceding paragraph, the Firm shall send a final letter by registered post to the existing accountant, stating that he assumes there is no professional or other reasons why he should not accept the appointment and that he intends to do so. The Firm may accept the engagement if the Firm is satisfied that there are no other professional reasons for the proposed change after taking into account the relevant guidance set out in the Ethics code.

The Firm shall customise its procedures accordingly and ensure compliance with the Ethics codes of ISCA and ACRA under subsection ‘Changes in a Professional Appointment’.

The Firm will generally need to obtain the client’s permission, preferably in writing, to initiate discussion with the existing accountant. Once that permission is obtained, the Firm shall comply with relevant legal and other regulations governing such requests. If the Firm is unable to communicate with the existing accountant, the Firm shall take reasonable steps to obtain information about any possible threats by other means, such as through inquiries of third parties or background investigations of senior management or those charged with governance of the client.

The Firm shall issue its engagement letter and/or consent to act as auditor only after performing the necessary due diligence procedures, risk assessment procedures and receiving the professional clearance from the predecessor auditor.

All engagements shall be accepted only upon completion of a formal acceptance process, with satisfactory results.

It is reasonable for the Firm to make notes of its review in support of its own documentation requirements under SSA 230.

The Firm ensures that all letters sent and obtained are duly filed.

Appointment of new auditor Bestar in place of resigning auditor

the consent of an accounting corporation must be in writing signed by at least one director of the corporation.

Asking the existing or predecessor accountant to provide any known information of which, in the existing or predecessor accountant’s opinion, the proposed public accountant needs to be aware before deciding whether to accept the engagement.

In the case of an audit or review of financial statements, a public accountant shall request the existing or predecessor accountant to provide known information regarding any facts or other information of which, in the existing or predecessor accountant’s opinion, the proposed public accountant needs to be aware before deciding whether to accept the engagement.

Client Acceptance and Professional Clearance

Intended audience: Professional Accountants in Public Practice

Company X approached Bestar to audit its financial statements for the year ended a year ago. Company X informed Bestar A that they have attempted to reach its auditor from audit firm B for the past six months but to no avail and therefore decided to engage Bestar to audit its financial statements for the year ended a year ago (the last financial year audited by B ended two years ago). Given the above circumstances, Bestar has performed a search of audit firm B from the Accounting and Corporate Regulatory Authority (ACRA) and found out that audit firm B had been “removed” (dissolved).

Issue:

Can Bestar accept Company X for this audit engagement? Does Bestar need to seek professional clearance given the above circumstances?

Considerations / Recommendations:

The Code of Professional Conduct and Ethics (the Code) requires a practising member to obtain professional clearance from an existing auditor before he/she accepts a nomination as the new auditor.

Paragraphs SG210.17C and SG210.17D of the Code appear to imply that if after having exhausted all avenues to contact the existing auditor fails, the proposed practising member may accept the engagement if he/she is satisfied that there are no professional or other reasons for the proposed change after taking into account the guidance set out in paragraphs 210.10 to 210.18 of the Code. Proper documentation on this should be kept.

Proper documentation on its communication with Company X client and the search of audit firm B should be kept to demonstrate that professional clearance is not possible given the circumstances, and that the best possible efforts to seek professional clearance have been performed but to no avail.

The Code of Professional Conduct and Ethics (the Code) requires a practising member to obtain professional clearance from an existing auditor before he/she accepts a nomination as the new auditor.

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professional clearance request letter

ACCEPTANCE OF CLIENT RELATIONSHIPS AND SPECIFIC ENGAGEMENTS

Acceptance of new client that is currently audited by another professional firm 

(Applicable to Client Acceptance only)

The Firm, when asked to replace another professional firm shall determine whether there are any reasons, professional or otherwise, for not accepting the engagement.

The Firm shall require direct communication with the existing accountant to establish the facts and circumstances regarding the proposed change so that the Firm can decide whether it would be appropriate to accept the engagement.

The Firm shall ask the existing accountant to provide known information on any facts or circumstances that, in the existing accountant’s opinion, the Firm needs to be aware of before deciding whether to accept the engagement.

Bestar shall send a professional clearance request letter to the existing accountant and obtain a reply in writing, indicating that there are no professional or other reasons that might negatively influence Bestar’s decision whether to accept the engagement.

If the Firm does not receive a reply from the existing accountant within a reasonable time and the Firm has no reason to believe that there are any exceptional circumstances surrounding the proposed change, the Firm shall use such other reasonable means to communicate with the existing accountant.

If the Firm is unable to obtain a satisfactory outcome pursuant to the preceding paragraph, the Firm shall send a final letter by registered post to the existing accountant, stating that he assumes there is no professional or other reasons why he should not accept the appointment and that he intends to do so. The Firm may accept the engagement if the Firm is satisfied that there are no other professional reasons for the proposed change after taking into account the relevant guidance set out in the Ethics code.

The Firm shall customise its procedures accordingly and ensure compliance with the Ethics codes of ISCA and ACRA under subsection ‘Changes in a Professional Appointment’.

The Firm will generally need to obtain the client’s permission, preferably in writing, to initiate discussion with the existing accountant. Once that permission is obtained, the Firm shall comply with relevant legal and other regulations governing such requests. If the Firm is unable to communicate with the existing accountant, the Firm shall take reasonable steps to obtain information about any possible threats by other means, such as through inquiries of third parties or background investigations of senior management or those charged with governance of the client.

The Firm shall issue its engagement letter and/or consent to act as auditor only after performing the necessary due diligence procedures, risk assessment procedures and receiving the professional clearance from the predecessor auditor.

All engagements shall be accepted only upon completion of a formal acceptance process, with satisfactory results.

It is reasonable for the Firm to make notes of its review in support of its own documentation requirements under SSA 230.

The Firm ensures that all letters sent and obtained are duly filed.

Appointment of new auditor Bestar in place of resigning auditor

the consent of an accounting corporation must be in writing signed by at least one director of the corporation.

Asking the existing or predecessor accountant to provide any known information of which, in the existing or predecessor accountant’s opinion, the proposed public accountant needs to be aware before deciding whether to accept the engagement.

In the case of an audit or review of financial statements, a public accountant shall request the existing or predecessor accountant to provide known information regarding any facts or other information of which, in the existing or predecessor accountant’s opinion, the proposed public accountant needs to be aware before deciding whether to accept the engagement.

Client Acceptance and Professional Clearance

Intended audience: Professional Accountants in Public Practice

Company X approached Bestar to audit its financial statements for the year ended a year ago. Company X informed Bestar A that they have attempted to reach its auditor from audit firm B for the past six months but to no avail and therefore decided to engage Bestar to audit its financial statements for the year ended a year ago (the last financial year audited by B ended two years ago). Given the above circumstances, Bestar has performed a search of audit firm B from the Accounting and Corporate Regulatory Authority (ACRA) and found out that audit firm B had been “removed” (dissolved).

Issue:

Can Bestar accept Company X for this audit engagement? Does Bestar need to seek professional clearance given the above circumstances?

Considerations / Recommendations:

The Code of Professional Conduct and Ethics (the Code) requires a practising member to obtain professional clearance from an existing auditor before he/she accepts a nomination as the new auditor.

Paragraphs SG210.17C and SG210.17D of the Code appear to imply that if after having exhausted all avenues to contact the existing auditor fails, the proposed practising member may accept the engagement if he/she is satisfied that there are no professional or other reasons for the proposed change after taking into account the guidance set out in paragraphs 210.10 to 210.18 of the Code. Proper documentation on this should be kept.

Proper documentation on its communication with Company X client and the search of audit firm B should be kept to demonstrate that professional clearance is not possible given the circumstances, and that the best possible efforts to seek professional clearance have been performed but to no avail.

The Code of Professional Conduct and Ethics (the Code) requires a practising member to obtain professional clearance from an existing auditor before he/she accepts a nomination as the new auditor.