1.

We would expect Harer & Jones CPAs, before accepting a new engagement or
a prospective client, following policies and procedures that are appropriate to
each client.
a. Obtain and review available financial information such as annual
reports, interim financial statements, income tax returns, news items
in the financial press, and others.
b. Inquire third parties about any information concerning the integrity of
the prospective client and its management. It involves making inquiries
of appropriate parties such as prospective clients bankers and
lawyers, credit agencies and other members of the business
community who may have such knowledge. In some cases, making an
inquiry of the local chamber of commerce may also be helpful.
c. Communicate with the predecessor auditor about:
i. Any disagreement between the predecessor auditor and the
client about accounting principles and auditing procedures, or
other similarly significant matters.
ii. Any facts that might have a bearing on the integrity of the
prospective clients management.
iii. Communications with those charged with governance regarding
fraud, non-compliance with laws and regulations, internal
control-related matters, and quality of accounting principles.
iv. The predecessor auditors understanding of the reasons for the
change of auditors.
Before accepting the engagement, the successor auditor should take
the initiative to communicate, either orally or in writing, with the
predecessor auditor. The successor auditor should obtain clients
permission to communicate with the predecessor auditor. This is
necessary procedure because the code of ethics refrain an auditor from
disclosing any confidential client information without specific consent
of the client, unless there is a legal or professional duty to disclose
Given the consent of the client, the predecessor auditor advises the
successor auditor whether there are any professional reasons not to
accept the engagement. If the clients consent is not given to the
predecessor auditor does not respond fully, the successor auditor
should consider the implications in deciding to accept the engagement.
d. Consider whether the prospective client has any circumstances that
will require special attention or that may represent unusual business or
audit risks, such as litigation or going concern problems. Matters
pertaining to this step in accepting an engagement include identifying
the intended users of the audited financial statements, making a
preliminary assessment of the prospective clients legal and financial
stability, identifying scope limitations, and evaluating the entitys
auditability

e. Determine if the audit team is independent of the client and able to

provide the desired service
f.

Determine if the audit team has the necessary technical skills and
knowledge of the industry to complete the engagement. In making
assignments, the nature and extent of supervision to be provided
should also be taken into account. Generally, the more able and
experienced the personnel assigned to a particular engagement, the
less is the need for a direct supervision.
The typical audit team consist of:
i. A partner, who has both overall and final responsibility for the
engagement.
ii. One or more, who usually have significant expertise in the
industry and who coordinate and supervise the execution of the
audit program.
iii. One or more seniors, who may have responsibility for planning
the audit, executing parts of the audit programs, and
supervising and reviewing the work of staff assistants.
iv. Staff assistants, who perform many of the required audit
g. Determine if acceptance of the client would violate any applicable
regulatory or ethical requirements.