Thanks, but that's not the question.
The "new" firm had other partners but they didn't use them...they used the partner from the "old " firm...hence, the problem. And yes, they were censured.
The registrant sued the new firm for what they called malpractice...essentially rendering an opinion that they couldn't render because of the independence violation, which then required re-audits.
The simplest way to put the question is:
Doesn't the registrant have an obligation to be aware of the 5 year lead auditor limitation? If so, wouldn't that hamper their prospects in the suit?
I don't want to complicate the question, but the auditor has an obligation to provide a formal "independence letter" laying out any relationships that the client might reasonably view as having a bearing on the issue of independence. The question is similar: Should an audit committee know that they are entitled to such a letter? If a client engages an auditor without receiving such a letter, have they effectively accepted at least some of the risk that any opinion rendered might not be independent?
The auditor in question is clearly at fault for assigning the "wrong" lead audit partner. Can an audit committee, which in this case was the board itself, be held responsible for failing to recognize the issue and allowing the engagement?
Ralph Wiggum: I cheated wrong. I copied the Lisa name and used the Ralph answers.
