An audit engagement letter sample is a legal document that clearly defines both parties’ responsibilities and duties in an auditing relationship. It is similar to a contract, but it is written in an easy-to-understand format without any legal technical language. It can be used to clarify important factors such as the audit timeline, its costs and what processes will be involved. This ensures that there are no misunderstandings about the scope of an audit and can protect both sides from potential disputes.
One of the most important elements of an audit engagement letter is establishing the timeline for performing audit fieldwork. This must be clearly identified since conducting some audit procedures may require the cooperation of staff and the availability of corporate records. It is also helpful to include a specific reference to the schedule of regulatory deadlines to avoid any misunderstandings about these requirements.
Other important elements of an audit engagement letter include clearly identifying the professional services to be rendered and enumerating the related deliverables for the audit. This should include the evaluation of internal controls and the preparation of an audit report and opinion letter at the end of the engagement.
Another vital aspect of an audit engagement letter is establishing the payment structure for professional fees. This must be clearly stated and outlined to help prevent misunderstandings about billing rates, estimated total fees and travel reimbursement. In addition, it is important to disclaim any obligation regarding fraud detection.