Beware: Precautions for Accepting Retention as a Successor Auditor

Jennifer F. Beltrami, JD

If a CPA firm is contacted by a potential client seeking a new accounting firm to perform the company's next audit, the firm should proceed with care. First, the firm should ask why the company is changing accountants. Without a very detailed answer to that question from both the company and the prior auditor, the potential successor auditor should think twice about accepting the engagement. If the firm does decide to proceed on less than full disclosure, it should be aware that the risks are real and can be costly, as illustrated by the verdict in a recent case against BDO Seidman. A firm can satisfactorily avoid a fate similar to that suffered by BDO, however, if it follows careful practices when considering an engagement as a successor auditor.