Refer to ISA 210, par 9 to 12, for the agreement on audit engagement terms and ISA 210, Appendix 1, for
an example of an audit engagement letter
ISA 210, paragraphs 9 to 12, outline the requirements for the agreement on audit engagement terms. According to these paragraphs, the auditor and the client should reach an understanding regarding the responsibilities of each party, the scope of the audit, the form of any reports to be issued, and any other relevant terms of the engagement. The agreement should be documented in an audit engagement letter that is signed by both parties.
ISA 210, Appendix 1, provides an example of an audit engagement letter that outlines the terms of the audit engagement. The letter typically includes the following key elements:
1. The objective and scope of the audit engagement
2. The responsibilities of the auditor and the client
3. An overview of the audit approach and methodology
4. The basis for the auditor's opinion
5. Any limitations of the audit
6. The form of any reports to be issued
7. The agreed-upon fee for the audit services
8. Terms for billing and payment
9. Any additional services to be provided by the auditor
10. Signatures of the auditor and the client to indicate their agreement to the terms outlined in the engagement letter.
Overall, the audit engagement letter serves as a formal written agreement between the auditor and the client, outlining the terms of the audit engagement and ensuring that both parties have a clear understanding of their roles and responsibilities.