- 5 Marks
Question
The nature of the relationship between the audit firm and the client is specified in an engagement letter, which helps reduce the possibility of misunderstanding the auditor’s position. This letter should be reviewed, updated, and signed on an annual basis.
Required:
Explain FOUR (4) mandatory terms contained in an engagement letter.
Answer
Mandatory terms in an engagement letter:
- The objective and scope of the audit, specifying the nature of the work to be performed.
- The auditor’s responsibilities, outlining what the auditor is expected to do during the audit.
- The responsibilities of management, indicating their role in providing financial statements and access to information.
- Identification of the applicable financial reporting framework that will be used for the audit
- Tags: Audit, Client Engagement, Engagement Letters, ISA 210, Terms
- Level: Level 2
- Uploader: Theophilus