- Statutory Matters
- The firm should be a holder of a practicing certificate issued in accordance to section 21 of the Accountants Act.
- Ensure the firm is not disqualified to act as the auditors of the company under section 161 (2) of the Companies Act, that is:
- The auditor is an officer of the company
- The auditor is in employment of an officer or servant of the company.
- The auditor/firm is a body corporate
- Ensure that all the auditors in the firm are legally and professionally qualified to act as auditors.
- The auditor should then request client permission to communicate with the previous auditors, to avail all the information to enable him decide whether his is prepared to accept nomination.
- If such permission is denied, the auditor should decline nomination.
Ethical Matters - Auditor should check if the firm is related to the client in any manner that may endanger the firm‘s independence.
- He should check whether the firm has adequate resources in terms of skills and expertise knowledge necessary to service the needs of the potential client.
- Check the current commitments of the firm that may affect its ability to carry out the audit and complete it effectively.
- Check the risk exposures associated to the client as regards the firm‘s reputation.
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