You are a senior auditor at CPA LLP. This year, your audit client is Burnaby Wholesalers Ltd, a Canadian public listed firm that distributes building materials, hardware, gardening, and related products to retail stores that service the "do-it-yourself" home improvement market. The audit engagement team includes you, one engagement partner, three junior auditors, and two senior auditors. The fiscal year-end under audit is December 31, 2021. Prior to the current fiscal year, Burnaby Wholesalers was audited by another public accounting firm, but the client changed auditors in early June 2021 because management was dissatisfied with the predecessor audit firm's high audit fee and lack of timely service. During the audit of Burnaby Wholesalers, you encounter the following scenarios. Please respond to each scenario and include your discussions in one PDF document.

1. During a meeting with the engagement partner, the engagement partner told you how Burnaby Wholesalers Ltd became the client of CPA LLP. In June 2021, during a golf tournament at a local country club, the engagement partner approached the CEO of Burnaby Wholesalers and asked if the CEO was satisfied with his incumbent audit firm. The CEO expressed some frustration with the firm, saying that their audit fee was quite high and the auditors often did not deal with issues in a timely manner. The engagement partner agreed that the audit fee was high and offered to visit the client's premises the next day. The partner then spent some time at the client's premises to get a basic understanding of the business and an estimate of how much time the audit would require.
The partner offered to perform this year's audit at a much lower fee. The CEO agreed to the fee, and immediately telephoned the incumbent audit firm and informed the auditors that their services would no longer be needed. The engagement partner drafted a formal engagement letter containing the usual information and sent it to the CEO for signature. The CEO signed it and returned it to CPA LLP. After receiving the engagement letter, the partner contacted the predecessor audit firm by telephone and asked if he could arrange to review the firm's audit working papers for the year ended December 31, 2020. This request was politely refused. The partner wrote a detailed memorandum for the permanent files describing the situation and his agreement with the CEO of Burnaby Wholesalers. Please discuss the client acceptance process regarding Burnaby Wholesalers and its implications on this year's audit engagement. 

Answer rating: 100% (QA)

The client acceptance process for Burnaby Wholesalers was not completed in accordance with the auditors professional standards An auditor should not a... View the full answer