Engagement Acceptance

Question 1

Preconditions of an Audit

Answer 1

Auditors should make sure

• its an acceptable applicable financial reporting framework
• engagement letter - agreement of management
• no scope limitation by management

Question 2

Engagement Letter

Answer 2

Contains:
- objective/scope of the audit
- responsibilities of the auditor
- responsibilities of management
- statement of inherent limitations of an audit - material misstatements may not be detected
- identification of the applicable financial reporting framework
- reference of the expected form and content of any reports to be issued by auditor
It may also include:
- scope of the audit
-form of any other communication
- composition of the audit team
- expectation management will provide written representations
- expectation that management will make info available
- subsequent events
- fees & billings