An audit engagement letter is a written agreement between you and your client that outlines the scope of your work, what the client is responsible for, how long the audit will take and details about your fee. This will prevent misunderstandings and ensure all parties are on the same page.
This is a document that should be sent immediately after verbal confirmation of appointment and ideally before any audit fieldwork begins. It clearly defines your responsibilities, limitations and any potential obstacles that could impact the timing of the audit. For example, an audit engagement letter may include a timeline for completing fieldwork and a date by which the audit report will be released. It also establishes the process for addressing scope adjustments and associated incremental fees, as well as other terms such as confidentiality commitments, dispute resolution and electronic data management.
Moreover, an effective audit engagement letter clearly states that the auditor is not responsible for detecting fraud and irregularities. Rather, the goal of an audit is to provide a fair, objective and independent evaluation of financial statements. This helps avoid a misunderstanding between the client and the auditor that may otherwise result in an unfavorable professional opinion or a significant monetary disbursement.
An audit engagement letter should finish with a request that the client confirm in writing their acceptance of these terms and conditions and a signature with a date. It is also recommended to include an archive date so that this document will be easily searchable when referred to in the future. Looking for an easier way to collect documents from clients? Try File Request Pro. It offers a robust document collection platform that simplifies the entire process with automation tools, redundant backups and integrated access controls.