The president of Allpurpose Loan Company had a genuine dislike for external auditors. Almost any conflict generated a towering rage. Consequently, the company changed auditors often.
Wells & Ratley (W&R), PAs, was recently hired to audit the 2013 financial statements; the firm succeeding the firm of Canby & Company which had obtained the audit after Albrecht & Hubbard (A&H) had been fired. A&H audited the 2012 financial statements and rendered a report that contained an additional paragraph explaining an uncertainty about Allpurpose Loan Company’s loan loss reserve.
Goodbye, A&H! Canby, & Company then audited the 2013 financial statements, and Art Canby started the work. But, before the audit could be completed and an audit report issued, Canby was fired, and W&R was hired to complete the audit.

Does W&R need to initiate communications with Canby & Company? with A&H? with both? Explain your response in terms of the purposes of communications between predecessor and successor auditors.

  • CreatedJanuary 09, 2015
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