Question

explain in your own words the engagement letter content and importance in the audit process

Answer 1

the significant information that should contain in the engagement letter should be:

• Client background for example the nature of business, location, key management etc
• Scope of works
• Objective of audit
• Type of financial framework that client use
• Audit fee or sometime call engagement fee
• Timeline of audit report
• Auditors responsibilities
• Client responsibilities
• Auditor right to assess financial information and related records ( the most importance one)

Audit Engagement Letter is required to be treated as contract at the time of dispute for the level of service provided and the services agreed between the client and the auditor. It helps in resolving the disputes and cast responsibilities and accountabilty.