Communication with Previous Auditor :
As per Clause 8 of the Part I of the first schedule to the Chartered Accountants Act, 1949, a chartered accountant in practice cannot accept position
as auditor previously held by another chartered accountant without first communicating with him in writing.
The objective of communicating with the previous auditor is that the proposed auditor may have an opportunity to know the reasons for the change in order to be able to safeguard his interest, the legitimate interest of the public, and the independence of the existing chartered accountant. When communicating with the previous auditor, the incoming auditor should primarily find out whether there is any professional or other reason why he should not accept the appointment.
A mere posting of letter under certificate of posting is not sufficient to establish communication with the previous auditor unless there is some evidence to show that the letter has in fact reached the previous auditor. The incoming auditor should, therefore, communicate with the previous auditor in such a manner as to retain in his hands positive evidence of the delivery of the communication to the addressee. In the opinion of the Council of the Institute, communication by a letter sent ‘Registered Acknowledgement Due’ or by hand against a written acknowledgement would in the normal course provide such evidence. Further it is seen, nowadays, that auditors communicate with each other electronically by email and often soft copies are used, however it is always advisable to subsequently procure the hard copies of the letters and proof of delivery and file the same in the audit files.
It is desirable that a member, on receiving communication from the auditor who has been appointed in his place, should send a reply to him as soon as possible.
The RBI has advised the banks that in order to enable the proposed auditors to comply with the requirement of communication with the previous
auditor, they should mention the name and address of the previous auditor in the appointment letter.
In case of joint auditors, each of the incoming auditors needs to communicate with each of the outgoing auditors.