Communication to Previous Statutory Auditor

Under the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI), it is mandatory for an incoming auditor to communicate with the previous statutory auditor before accepting an appointment. This is required under Clause (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949.

Failure to perform this communication is considered professional misconduct.

Key Points for Communication

• Purpose: To inquire whether there are any professional reasons why you should not accept the appointment (e.g., non-payment of fees by the client or other ethical concerns).

• Timing: This must be done before formally accepting the appointment.

• Method: The communication must be sent in a manner that provides positive evidence of delivery. Recommended methods include:

  • Registered Post Acknowledgement Due (RPAD) — highly recommended.

  • Hand delivery with a written acknowledgement of receipt.

  • Email with a read receipt.

• Wait Time: You must wait for a reasonable time (typically 7 days) for a response. If no response is received, you may proceed, provided you have evidence that the communication was sent.

Sample Format

You may adapt the following template for your letter:

[Your Firm’s Letterhead]

Date: [Insert Date]

To,

[Name of Previous Auditor/Firm]

[Address of Previous Auditor]

Subject: Communication regarding appointment as Statutory Auditor of [Client Name]

Dear Sir/Madam,

We have been approached by [Client Name] to act as their Statutory Auditor for the financial year [Year].

In accordance with the requirements of the Code of Ethics issued by the Institute of Chartered Accountants of India, we are writing to you to inquire whether there are any professional reasons or other relevant circumstances why we should not accept this appointment.

We would appreciate it if you could kindly inform us of any such reasons or if there are any undisputed audit fees or expenses relating to previous audits that remain outstanding against the client.

Please note that if we do not receive a response from you within 7 days of the receipt of this letter, we shall presume that you have no objection to our accepting the said appointment.

Thanking you,

Yours faithfully,

For [Your Firm Name]

[Partner/Proprietor Name]

Membership No: [Insert Number]

Firm Registration No: [Insert Number]

Summary: Before accepting a new audit, you must send a formal communication (via RPAD or email with read receipt) to the previous auditor to check for professional objections, such as outstanding fees. Failing to do this constitutes professional misconduct.