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Audit Engagement

In: Business and Management

Submitted By ratnadewi
Words 380
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What Is an Audit Engagement?

When a company has to go through the audit process, an auditor may use the term "audit engagement." This can mean different things, so it is important that the auditor clarify what he means when he uses the term. Regardless of which definition the auditor follows, however, the auditor always follows specific procedures and guidelines for handling the engagement.

Audit Engagement Letters
Auditors generally provide audit engagement letters as one of the final steps in the audit planning stage. The letter summarizes all the information the auditor has gained about the client, the client needs and audit objectives, as well as the scope of the audit and what the client is responsible for doing. Additionally, audit engagement letters clearly indicate the auditor assigned to the audit. They also may indicate additional information the auditor will need during the audit, the auditor's fees, people with whom the auditor will need to speak and how much time the auditor has to finish his work. Also sometimes included are relevant financial and accounting regulations to which the auditors must adhere. A good audit engagement letter also recognizes that not all clients are familiar with audit procedures and therefore outlines those procedures for clarification. Audit engagement letters are very similar to work contracts in the way they are constructed in that they define duties and relationships, but based on their wording, they are not necessarily legally binding the way a formal contract is.

purpose of the engagement letter
The main purpose of the engagement letter is to clearly define the extent of the responsibilities of the auditor and so minimise the possibility of any misunderstanding between the client company and the auditor in this respect.
It is in the interest of both client and auditor that the auditor sends an engagement letter,

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