Upon receipt of a request to accept appointment as auditor of an organisation the auditor should carry out the following procedures before accepting nomination.

Before

• Ensure he is professionally, legally and ethically qualified to act as an auditor. The auditor must ensure that he has not contravened any provisions of the companies Act in regard 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 present auditor.

1. Communication is important;
2. To get necessary information that could guide him on whether to accept or reject nomination.
3. To enquire reasons for the change in auditors
4. It is a detail of professional courtesy

• Request permission before hand to communicate with the outgoing auditor, if not granted decline the nomination.
• With regard to this communication ICAEW (Institute of Certified Accountant of England and Wales) has laid down the following comments, which we can borrow from:

1. Purpose of communication.
2. Initiative rests with the new or incoming auditor the existing auditor should not volunteer information.
3. It enables all relevant fact to be known by the member before he accepts nomination.
4. The response should be immediate. However communication can also continue in latter days.
5. Issues as to professional considerations, which arise mainly, provide reasons for change.
6. Discuss issues arising with the client and only if they agree should the auditor agree/accept nomination.
7. If the existing auditor holds some belief about an unlawful conduct of the client but is not certain then he should impart his belief to the new auditor.
8. Where there has been refusal to supply information by the client the existing auditor should inform the proposed auditor.
9. When the existing auditor makes a defamatory statement about the client or any other party dealing with the client and it turnout to be untrue, he is not liable if the statements were made without malice unless:
   1. He doesn’t state only what he sincerely believes is true.
   2. He carelessly makes imputations against client and third parties.
   3. If the proposed auditor does not get a reply within reasonable time he has reason to believe that there are unusual circumstances surrounding the proposed change. He should get in touch through other means or send a further letter saying that unless he receives a reply he shall assume that there are no other issues to be considered.