ISA 210 - Agreeing the terms of audit engagements Flashcards
What is the main purpose of ISA 210?
ISA 210 governs the agreement of terms for external audit engagements, ensuring that both the auditor and the client have a clear written understanding of the audit’s terms and conditions to prevent an ‘Expectations gap’
What should an auditor do for recurring audits according to ISA 210?
For recurring audits, the auditor must assess whether circumstances have changed that require revising the terms of the audit engagement and decide if there is a need to remind the client of the existing terms.
What are the preconditions for an audit under ISA 210?
Preconditions include:
1) an acceptable financial reporting framework;
2) agreement by management on their responsibilities for preparing the financial statements, maintaining internal control, and providing the auditor with necessary information and access;
3) the auditor must not anticipate a disclaimer of opinion.
What are the key components of the engagement letter under ISA 210?
The engagement letter should include:
1) Objective and scope of the audit;
2) Responsibilities of both the auditor and the client;
3) Identification of the applicable financial reporting framework;
4) Form and content of the audit reporting.
What additional elements can an engagement letter include under ISA 210?
Additional elements can include: Explanation of audit limitations, arrangements for audit planning and performance, composition of the audit team, the basis of fee computation and billing, and arrangements concerning the involvement of other auditors, experts, and internal auditors.
