Engagement Letter

IAASB Main Agenda (April 2007) Page 2007·1365

Agenda Item 9-E

This document is the “Close-Off” version of ISA 210, which was provided to the Task Force by IFAC Staff (6 Jan.07) to be used as the base document (starting point) for the Clarity Redraft of ISA 210.

INTERNATIONAL STANDARD ON AUDITING 210 TERMS OF AUDIT ENGAGEMENTS

Introduction

1. The purpose of this International Standard on Auditing (ISA) is to establish standards and provide guidance on: (a) Agreeing the terms of the engagement with the client; and (b) The auditor’s response to a request by a client to change the terms of an engagement to one that provides a lower level of assurance. 2. The auditor and the client should agree on the terms of the engagement. The agreed terms would need to be recorded in an audit engagement letter or other suitable form of contract. This ISA is intended to assist the auditor in the preparation of engagement letters relating to audits of financial statements. In some countries, the objective and scope of an audit and the auditor’s obligations are established by law. Even in those situations the auditor may still find audit engagement letters informative for their clients.

3. 4.

Audit Engagement Letters

5. It is in the interest of both client and auditor that the auditor sends an engagement letter, preferably before the commencement of the engagement, to help in avoiding misunderstandings with respect to the engagement. The engagement letter documents and confirms the auditor’s acceptance of the appointment, the objective and scope of the audit, the extent of the auditor’s responsibilities to the client and the form of any reports.

Agreement on Written Representations

6. The auditor should obtain the acknowledgement and agreement of management and, where appropriate, those charged with governance that they understand their responsibilities for: • Preparing and presenting the financial statements

Prepared by: IAASB (March 2007)

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