Q.Why does a newly appointed auditor communicate with the previous auditor before accepting an audit engagement?
(A) To obtain the previous auditor's permission to increase the audit fee
(B) As a matter of professional courtesy and to learn of any professional reasons the appointment should not be accepted
(C) To copy the previous auditor's audit report word for word
(D) Because the Companies Act, 2013 requires the new auditor to pay a fee to the previous auditor

This step exists to protect professional standards across the whole profession, not to manage fees or paperwork between auditors.

There is no requirement to seek fee-related permission, copy a prior report verbatim, or make any payment to the outgoing auditor. The genuine purpose, per Section a, is professional courtesy plus finding out whether there is any reason (e.g. an unresolved dispute or concern about the client) the new auditor should know before accepting.

Section a identifies communication with the previous auditor as one of the standard preparatory steps for a newly appointed auditor. This is rooted in professional ethics rather than any transactional obligation between the two auditors.

The new auditor communicates with the outgoing auditor for two connected reasons: first, simple professional courtesy within the auditing profession, since auditors are expected to treat each other's professional standing with respect; and second, and more substantively, to find out whether there is any professional reason the new engagement should not be accepted — for example, an unresolved disagreement with the client, doubts about management's integrity, or reasons the previous auditor did not continue that a prudent new auditor would want to know before taking on the client.

None of the distractor options describe a real practice: there is no fee-approval requirement from the previous auditor, no obligation (or propriety) in simply copying a prior audit report, and no statutory payment owed to an outgoing auditor merely for having previously held the role.

Students sometimes think this step is only a formality with no real substance — in fact, its practical value is genuine: the previous auditor may know something material about the client's integrity or accounting practices that directly affects whether the new auditor should accept the engagement at all.