3.59 Predecessor and Successor Auditors. The president of Allpurpose Loan Company had a genuine dislike for external auditors. Almost any conflict generated a towering rage. Conse- quently, the company changed auditors often. The firm of Wells & Ratley (W&R), CPAs, was recently hired to audit the 2017 financial statements. W&R succeeded the firm of Canby & Company (C&C), which had obtained the audit after Albrecht & Hubbard (A&H) had been fired. A&H audited the 2016 financial statements and rendered a report that contained an additional paragraph explaining an uncertainty about Allpurpose Loan Company's loan loss reserve. Goodbye A&H! The president then hired C&C to audit the 2017 financial statements, and Chris Canby started the work, but before the audit could be completed, Canby was fired and W&R was hired to complete the audit. C&C did not issue an audit report because the audit was not finished. Required: Does the Wells & Ratley firm need to initiate communications with Canby & Company? With Albrecht & Hubbard? With both? Explain your response in terms of the purposes of communications between predecessor and successor auditors. 3.60 Client Selection. You are a CPA in a regional public accounting firm that has 10 offices in three states. Mr. Shine has approached you with a request for an audit. He is president of Hitech Software and Games Inc., a five-year-old company that has recently grown to $500 million in sales and $200 million in total assets. Shine is thinking about going public with a $25 million issue of common stock, of which $10 million would be a secondary issue of shares he holds. You are very happy about this opportunity because you know Shine is the new president of the Symphony Society board and has made quite a civic impression since he came to your medium-size city seven years ago. Hitech is one of the growing employers in the city