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Audit Engagement Letter Example

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Audit Engagement Letter ExampleAs it is discussed on my previous post [Audit Process for Nonpublic Audits], the auditor should establish an understanding with entity regarding the nature of the services to be provided. This understanding should include the objectives of the engagement, management’s responsibilities, the auditor’s responsibilities, and limitations of the engagement. An engagement letter as [it is presented on below example] reduces to writing the understanding of the arrangements concerning the services to be provided and helps eliminate potential misunderstandings that otherwise may arise.

 

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Lie Dharma Putra & Partners

Certified Public Accountants

[Date]

 
Mr. Edward Brown, President
Anonymous Company, Inc.
Nowhere
Somewhere, New York 10000

Dear Mr. Brown:

This will confirm our understanding of the arrangements for our audit of the financial statements of Anonymous Company, Inc., for the year ending [date].

We will audit the Company’s balance sheet at [date], and the related statements of income, retained earnings, and cash flows for the year then ended, for the purpose of expressing an opinion on them. The financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements based on our audit.

We will conduct our audit in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit will provide a reasonable basis for our opinion.

Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected customers, creditors, legal counsel, and banks. At the conclusion of our audit, we will request certain written representations from you about the financial statements and matters related thereto.

Our audit is subject to the risk that material errors and irregularities, including fraud or defalcations, if they exist, will not be detected. However, we will inform you of irregularities that come to our attention, unless they are inconsequential.

If you intend to publish or otherwise reproduce the ?nancial statements and make reference to our firm, you agree to provide us with printers’ proofs or masters for our review and approval before printing.

You also agree to provide us with a copy of the ?nal reproduced material for our approval before it is distributed.

We will review the Company’s federal and state [identify states] income tax returns for the fiscal year ended [date]. These returns, we understand, will be prepared by your controller.

Further, we will be available during the year to consult with you on the tax effects of any proposed transactions or contemplated changes in business policies.

Our fee for these services will be at our regular per diem rates, plus travel, and other out-of-pocket costs.

Invoices will be rendered every two weeks and are payable on presentation.

We are pleased to have this opportunity to serve you.

If this letter correctly expresses your understanding, please sign the enclosed copy where indicated and return it to us.

 
Sincerely yours,
Lie Dharma Putra & Partners

Managing Partner

Approved By:
Date:

 

I hope this audit engagement letter example a contribution.

5 Comments

5 Comments

  1. glenice santiago

    Mar 14, 2011 at 7:26 am

    hello sir: this pertains to the sample audit engagement letter that you had been posted. I am very thankful of it, because it serves as my reference in my auditing subject.. thank you so much and more power!!!

  2. Ankur tyagi

    Jun 15, 2011 at 10:56 am

    hello sir,
    hoping u r well and u will always be helpful for us. Ur letter really helped me a lot to understand what the engagement letter is all about. Thanks a million

  3. Comfort N. Pah

    May 17, 2012 at 10:29 am

    Hello Sir

    Thanks for posting such an audit engagement letter on the net. I used it to do my assignment resulting to a good grade mark. Thanks so much.

    Comfort N. Pah
    UL Liberia

  4. RON B

    Nov 26, 2012 at 12:26 pm

    hi Sir.so much thanks to u for a comprehensive illustration of the engagement which has proved to be useful to me now and again in my auditing study.

  5. Jacob Grace

    May 21, 2015 at 5:15 am

    sir, i show my gratitude by writing, saying thank you. The letter above was of help to me and i hope to read more of your works.

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