Question

describe  in detail Audit Appointment Letter with the references

Answer 1

The main objectives of an engagement letter are as follows:

• It clearly defines the extent of auditor’s responsibilities and to minimize the possibility of any misunderstanding between the client and the auditor.
• It provides written confirmation of the auditor’s acceptance of his appointment and the scope of an audit and the form of his report.
• The client becomes aware of the statutory responsibilities of the directors which in no way are diminished by the appointment of an auditor.
• Management is informed that the audit tests would be based upon the results of an evaluation of internal control.
• The client has explained the statutory requirements of the company’s ordinance and through the matters to be reported are satisfied by law; the auditor would be free to report on the matter in respect of which he is not satisfied.
• The client becomes informed about the other professional services that the auditor can provide.
• The client is briefed that the discovery of fraud is not the main aim of the audit.

For your reference there are several points which are included in audit engagement letter:-

• Auditor’s responsibilities.
• Management’s responsibilities.
• Scope of Audit.
• Management’s representation.
• Irregularities and fraud.
• Other services.
• Fees.
• Client’s confirmation

I have explained everything step by step.

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