Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

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Before reissuing an audit report on the financial statements of a former client, which letters of representation should the predecessor auditor obtain?

  1. The former client's management and the board of directors

  2. The former client's attorney and management

  3. The successor auditor and the former client's management

  4. The successor auditor and the former client's board of directors

The correct answer is: The successor auditor and the former client's management

When a predecessor auditor is considering reissuing an audit report for a former client, it is essential to obtain letters of representation from both the successor auditor and the former client's management. The letter from the successor auditor is crucial because it confirms that they have no reason to believe there are any significant issues or discrepancies in the financial statements that could affect the audit opinion. This collaboration ensures that the current auditors are aware of the context and are willing to accept the audit report and opinion provided by the predecessor auditor. Furthermore, it guarantees accountability, as the successor auditor is responsible for the continuation of the audit process and ensuring the financial statements align with current audits. The letter from the former client's management holds significance as it helps confirm the integrity of the information that was available to the management at the time of the audit. Management’s representation covers aspects such as the completeness and accuracy of information provided to auditors and acknowledges their responsibilities concerning the financial statements. Both of these letters are necessary to support the reissuance of the audit report, providing assurances about the integrity of the audits completed and the appropriateness of the financial statements from both ends of the auditor-client relationship. This dual confirmation helps maintain the quality and credibility of financial reporting in line with professional auditing standards.

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