Acceptance and Continuance of Client RelAcceptance and Continuance of Client Relationships and Specific Audit Engagements

Acceptance and Continuance of Client Relationships and Specific Audit Engagements

17 The engagement partner shall be satisfied that appropriate procedures regarding the acceptance and continuance of client relationships and specific audit engagements have been followed, and that conclusions reached in this regard are appropriate and have been documented.

18 The engagement partner may or may not initiate the decision-making process for acceptance or continuance regarding the audit engagement. Regardless of whether the engagement partner initiated that process, under paragraph 17 of this Auditing Standard, the partner needs to determine whether the most recent decision remains appropriate.

19 Acceptance and continuance of client relationships and specific audit engagements include considering:

• The integrity of the principal owners, key management and those charged with governance of the entity.
• Whether the engagement team is competent to perform the audit engagement and has the necessary time and resources.
• Whether the firm and the engagement team can comply with ethical requirements.

20 Where issues arise out of any of these considerations, under paragraph 34 of this Auditing Standard, the engagement team needs to conduct appropriate consultations and document how issues were resolved. Also refer to explanatory guidance set out in paragraphs 35 to 37 of this Auditing Standard.

21 Deciding whether to continue a client relationship ordinarily includes consideration of significant matters that have arisen during the current or previous audit engagements, and their implications for continuing the relationship. For example, a client may have started to expand its business operations into an area where the firm does not possess the necessary knowledge or expertise.

22 Where the engagement partner obtains information that would have caused the firm to decline the audit engagement if that information had been available earlier, the engagement partner shall communicate that information promptly to the firm, so that the firm and the engagement partner can take the necessary action.