Client Acceptance of Audit Exercise and Retention of Reports
According to Companies Act, 2015, the following are the procedures that a proposed auditor must undertake before accepting nomination.
- Ensure he is professionally, legally and ethically qualified to act as an The auditor must ensure that he has not contravened any provisions of the Companies Act in regards to independence. He must ensure that he is not a servant or in partnership with a servant of the company. He must also ensure that he has fulfilled all the professional ethical requirements in regard to independence. i.e. he must not have any personal, family or business relationships with the prospective client among other provisions.
- Establish whether the firm’s resources are adequate to service the needs of the new client i.e. staff time with the necessary technical competence.
- Seek references about the status of the company and its management. Such references will assist the auditor in assessing the potential risk in associating with this new client. Information sought would include the reputation of the company and its directors
- Communicate to the present auditor. Communication enables one to get necessary information that could guide him on whether to accept or reject nomination. Secondly, to enquire reasons for the change in auditors and as a detail of professional courtesy
Rules of Professional Conduct Statement ‘Changes in a professional appointment’
- Obtain client’s permission to communicate with present auditor
- If refused decline nomination
- If permission granted, write to auditor requesting information which may help decision whether to accept nomination
Present auditor receiving request should
- request client’s permission to freely discuss affairs
- if refused inform proposed new auditor (who should decline nomination)
- Discuss freely all relevant matters if permission granted by client.
After accepting nomination
- Ensure outgoing auditor’s removal/resignation properly conducted in accordance with national regulations
- Ensure new appointment properly conducted
- Send out an Engagement Letter to the directors
Retention of Reports
Procurement records should be managed in accordance with the Public Procurement and Asset Disposal Act, 2015 and subsidiary Regulations. According to section 68 of PPAD Act 2015, The Accounting Officer is ultimately accountable for record keeping in the Procuring Entity. Section 43 (3) requires that inspectors/ auditors are given access to all relevant books, records, returns, reports and other documents.
The firm should establish policies and procedures designed to maintain the confidentiality, safe custody, integrity, accessibility and retrievability of documentation, for example:
- Passwords to restrict access to electronic documentation to authorised users
- Back-up routines
- Confidential storage of hard copy documentation.