The audit committee of the board of directors of WaterFun Corporation asked DDD LLP to audit WaterFuns

Question:

The audit committee of the board of directors of WaterFun Corporation asked DDD LLP to audit WaterFun’s financial statements for the 2022 fiscal year. DDD requested permission to communicate with the predecessor auditor and was granted permission by WaterFun’s management to do so.

Required

a. What inquiries should DDD make of the predecessor auditor?

b. Assuming that DDD is satisfied with the results of the communication with the predecessor auditor, the next step is to draft an engagement letter that will be presented to the audit committee of Water- Fun. Discuss the key items that should be included in an engagement letter. (Research AU-C 210.A23 to provide a full response. ASB standards can be accessed at the AICPA website, www.aicpa.org).

c. What if WaterFun’s management does not grant permission for DDD to communicate with the predecessor auditor? What action would DDD take next?

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