Audit Engagement letter

Audit engagement letter.

To the board of directors of ABC company

Acting as Auditors under the companies Act 1994

Responsibility and scope for audit services

Your responsibility as directors

As directors of the company, you are responsible for preparing financial statements that give a true and fair view and that have been prepared in accordance with the Companies Act 1994 (the Act). As directors, you must not approve the financial statements unless you are satisfied that they give a true and fair view of the assets, liabilities, financial position, and profit or loss of the company.

In preparing the financial statements, you are required to:

1. Select suitable accounting policies and then apply them consistently

2. Make judgments and estimates that are reasonable and prudent.

3. Prepare the financial statements on the going concern basis unless it is inappropriate to presume that company will continue in business

You are responsible for keeping adequate accounting records that set out with responsible accuracy at any time the company 's financial position and for ensuring that the financial statements comply with International Financial Reporting Standards and with the Companies Act 1994 and give a true and fair view .

You are also responsible for such internal control as you determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

You are also responsible for safeguarding the assets of the company and hence for taking responsible steps to prevent and detect fraud and other irregularities .

You are responsible for ensuring that the company complies with laws and regulations that apply to its activities and for preventing noncompliance and detecting any that occurs.

You have undertaken to make available to us, as and when required, all the company's accounting records and related financial information , including minutes of management and shareholders' meetings, that we need to do our work. You have also undertaken to provide us with unrestricted access to any persons from whom we deem it necessary to obtain audit evidence. Each director is required to take all steps that they ought to take as directors in order to make themselves aware of any relevant audit information and to establish that we are aware of that information .

Our responsibilities as auditor

We have a statutory responsibility to report to the members as a body whether, in our opinion, the financial statements have been properly prepared in accordance with IFRS Standards , whether they have been prepared in accordance with the Companies Act 1994, and whether they give a true and fair view. We are also required to report whether the information given in the directors' report is consistent with the financial statements. In arriving at our opinion, we are required to consider the following matters and report on any that we are not satisfied with:

1. Whether the company has kept adequate accounting records and whether branches that we have not visited have sent in returns adequate for our audit.

2. Whether the company's individual accounts are in agreement with the accounting records and returns.

3. Whether we have obtained all the information and explanations that we consider necessary for the purpose of our audit .

We may also need to deal with certain other matters in our report. If the company prepares accounts and reports in accordance with the small companies regime when, in our opinion, it is not entitled to do so, we are required to state that fact in our report.

We have a professional responsibility to report if the financial statements do not significantly comply with applicable financial reporting standards , unless we believe there is a good reason for the noncompliance. In deciding whether or not this is the case,we consider :

1. Whether the noncompliance is necessary for the financial statements to give a true and fair view .

2. Whether the noncompliance has been clearly disclosed .

We also have a professional responsibility to consider whether other information in documents containing audited financial statements is consistent with those financial statements .

Scope of audit

We will carry out our audit in accordance with the International Standards of Auditing issued by the Financial Reporting Council. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment , including the assessment of the risk of material misstatement of the financial statements , whether due to fraud or error. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Because of the test nature and other inherent limitations of an audit, together with the inherent limitations of any accounting and internal control system, there is an unavoidable risk that even some material misstatements may remain undiscovered .

We shall obtain an understanding of the accounting and internal control system in order to assess their adequacy as a basis for the preparation of the financial statements and to establish whether adequate accounting records have been maintained by the company. We shall expect to obtain such appropriate evidence as we consider sufficient to enable us to draw reasonable conclusions therefrom. In addition to our report on the financial statements, we will provide you with systems that come to our notice .

The nature and extent of our audit will vary according to our assessment of the company's accounting system and, where we wish to rely on it, the internal control systems, and may cover any aspect of the business's operation that we consider appropriate. Our audit is not designed to identify all significant deficiencies in the company's systems and internal control, but if we detect significant deficiencies, we will report them to you in writing .

As part of our normal audit procedures , we may ask you to confirm in writing representations you have made to us during the audit. In particular , where misstatements in the financial statements that we bring to your attention are not adjusted , you must state your reasons. In connection with representations and the supply of information to us generally , we draw your attention to section 335 of the Companies Act 1994, under which it's an offense for anyone to recklessly or knowingly supply information to the auditors that is false or misleading and to fail to promptly provide information requested.

To help us examine your financial statements, we'll ask to see all documents or statements that are due to the issues with the financial statements. We are also entitled to receive details of all written resolutions that are to be circulated to members, to attend all the company's general meetings, and to receive notice of them all.

You are responsible for safeguarding the company's assets and for preventing and detecting fraud, error, and noncompliance with laws or regulations. We will plan our audit so that we can reasonably expect to detect significant misstatements in the financial statements or accounting records, but you can not rely on us finding all such errors.

In respect of the expected form and content of our report, we refer you to the most recent bulletin on auditor reports published by the Institute of Chartered Accountants of Bangladesh. The form and content of the report may need to be amended in light of our findings. Once we've issued our report, we've no further responsibility in relation to the financial statements for that financial year. However, we expect that you will inform us of any material event occurring between the date of our report and the date the financial statements are sent out in accordance with IAS 10, which may affect the financial statements.

We look forward to full cooperation from your staff during our audit.

Other relevant information

Other information, such as fee arrangements, billings, and other specific terms as appropriate.

XYZ & Co.

Acknowledged and agreed on behalf of ABC Company.

By (signed)

Name & Title 

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