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Audit Requirements

DISCUSSION QUESTION 1

Even though an engagement letter is not officially required, SAS 83 (AU310) requires that auditors document their understanding of an engagement in the audit files. This documentation should include engagement objectives, responsibilities of both the auditor and management and any engagement limitations.
The engagement letter is important because it provides a clear understanding of the terms of the engagement for both the auditor and the client.
Items that should be included in the letter are:
1. Whether the auditor will perform an audit, review or compilation.
2. Any other services such as tax returns or management consulting.
3. Any restrictions to be imposed on the auditors work.
4. Deadlines for completing the audit.
5. Client’s personnel to be provided to assist the auditor in obtaining records and documents.
6. Schedules to be prepared for the auditor.
7. An agreement on fees.
8. A statement that the auditor...

Posted by: Geraint Watts

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