Auditing (Responsibilities and objectives Client engagement)

5 important questions on Auditing (Responsibilities and objectives Client engagement)

Why is client acceptation and retention such an important decision?

You should investigate why the company switches auditor is there something illegal going on? Is this new startup company going to survive the startup or will it go bankrupt? Do you have enough resources to audit the client?

Did the client pay on time, were there discussions with the old auditor?

What is a successor auditor and what is a predecessor auditor?

The successor auditor is the new auditor of the firm, and the predecessor auditor is the old auditor of the firm.

How does the SEC demotivate option shopping?

- Client needs to motivate the auditor switch
- Client needs to report serious disagreements with the auditor
- The predecessor auditor needs to agree with the movitvation
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Deis and Giroux 1996; Simon and Francis 1988

Initial audit fee discounts of approximately 25%

What is low balling?

First below initial audti fee (startersfee), after couple of years fees go up.

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