The audit committee of the board of directors of Bolly Corporation asked Paul and Paul, CPAs, to audit Bolly’s financial statements for the year ended December 31, 2018. Paul and Paul explained the need to make an inquiry of the predecessor auditor and requested permission to do so. Bolly’s management agreed and authorized the predecessor auditor to respond fully to Paul and Paul’s inquiries.
a. What information should Paul and Paul obtain during its inquiry of the predecessor auditor prior to accepting the engagement?
b. What additional audit procedures should Paul and Paul perform in evaluating Bolly as a potential client?