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Exam AUD topic 1 question 391 discussion

Actual exam question from AICPA's AUD
Question #: 391
Topic #: 1
[All AUD Questions]

Before accepting an engagement to audit a new client, an auditor is required to:

  • A. Make inquiries of the predecessor auditor after obtaining the consent of the prospective client.
  • B. Obtain an understanding of the entity and its environment, including its internal control.
  • C. Prepare a memorandum setting forth the staffing requirements and documenting the preliminary audit plan.
  • D. Discuss the management representation letter with the prospective client's audit committee.
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Suggested Answer: A 🗳️
Choice "A" is correct. Prior to acceptance of a new engagement, an auditor must attempt to communicate with the predecessor auditor. Inquiry is important because the predecessor auditor may provide information critical to the acceptance decision. Under the Rules of the Code of Professional Conduct, the auditor must first request the client's permission.
Choice "B" is incorrect. Although the auditor is required to obtain an understanding of the entity and its environment, including its internal control, this typically happens after the engagement is accepted, not before.
Choice "C" is incorrect. A planning memo setting forth staff requirements and documenting the preliminary audit plan is usually prepared after accepting an engagement.
Choice "D" is incorrect. A management representation letter is usually obtained at the conclusion of the audit and is dated as of the date of auditor's report.
by gemazyni at April 5, 2025, 4:35 p.m.

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