Engagement Letter

Question 1

What are pre-conditions for audit

Answer 1

Preconditions for an audit means,

1) AFRF used by management in preparation of financial statements is applicable
2) management( and tcwg where applicable) agreees to the premise on which an audit is conducted

Question 2

How auditor establishes whether pre conditions for audit are present / exist

Answer 2

1) auditor shell determine whether financial reporting Framework adopted by management in preparation of financial statements is applicable (considering nature of financial statements, purpose financial statements, nature of entity,legal requirements)
2) auditor shall obtain agreement from management via engagement letter that it understands and acknowledges its responsibilities
* For preparation and presentation of financial statements
* For such internal control which management and tcwg determine necessary for preparation of financial statements that are free form material misstatement
* To provide the auditor with all relevant information, additional information and unrestricted acces to Personnel

Question 3

Auditors response or course of action if any of preconditions for audit is not present

Answer 3

If preconditions for audit are not present auditor shell explain to management

1) what pre-conditions are
2) preconditions are required to comply with iSA’s
3) pre conditions are necessary to avoid misunderstandings about responsibilities of management and