In short
An engagement letter documents the agreed terms of an audit, including its objective and scope, the responsibilities of the auditor and management, the financial reporting framework and the expected form of the report.
Key takeaways
- The terms must be agreed in writing before the audit begins.
- It states that an audit has inherent limitations, so some material misstatements may not be detected.
- Recurring audits may not need a new letter each year, but the auditor considers whether the terms need revising.
Where it's tested
AUD: Engagement Acceptance & Quality Management — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Which matter should be documented in the engagement letter for an audit?