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

In what circumstance can a predecessor auditor reissue their report?

1. Only with approval from the current auditor.

2. When the prior audit report aligns with the current financial statements.

3. Upon receiving a request from the client.

4. Only if the predecessor is still engaged with the client.

The correct answer is: When the prior audit report aligns with the current financial statements.

A predecessor auditor can reissue their report primarily when the prior audit report aligns with the current financial statements. This means that if there have been no significant changes in the circumstances of the engagement or the financial statements since the original audit was conducted, the predecessor auditor can confidently confirm that their initial findings still hold true. Reissuing the report typically occurs when a client is transitioning to a new auditor and requests the previous auditor's report for inclusion in their current financial statements, often to provide stakeholders with context and continuity regarding the financial condition of the client. The predecessor auditor must take into account the current financial statements to ensure that there is clarity and consistency in what is being reported. Other circumstances, such as merely receiving a client request or requiring approval from the successor auditor, do not by themselves suffice for a reissue of the report. The fundamental aspect lies in the alignment between the prior report and the current financial statements, ensuring that users of the financial statements can rely on the predecessor audit as part of the broader financial picture.