SA 210 -Agreeing to the terms of audit engagement

SA 210 – Agreeing to the terms of audit engagement

Engagement letter is a letter written by the auditor setting out the terms of the engagement and it’s to be signed by the client. Auditor should not change the engagement letter unless there is a reasonable justification in doing so. If it is not justifiable, the auditor may consider withdrawing from the engagement.

Engagement letter is to be sent on recurring audits in case of:-

  • Changes in senior management
  • Changes in ownership
  • Change in legal requirements
  • Change in regulatory requirements
  • Revision in terms of engagement
  • Dispute/Difference in the terms of engagement

Acceptability of financial reporting framework depends on:-

  • Nature of entity
  • Nature of FS
  • Purpose of FS
  • Period of FS
  • Laws and regulations
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