An audit engagement letter sample is a legal document that sets out clear expectations from both sides at the start of any professional relationship. It is used to outline the responsibilities that have to be carried out and minimize any misunderstandings between both parties. It also provides written confirmation stating the acceptance of an auditor’s appointment, the scope of an audit along with the form of his report.
An effective audit engagement letter will also include a disclaimer section that emphasizes the limitations of the service being provided. This will help to prevent any legal disputes that might occur in the future. It will state that the scope of the work being performed is limited to professional standards and does not include a comprehensive investigation into potential illegal activities like fraud detection.
The letter will also detail the specific tasks that need to be completed during an audit and who is responsible for them. It will also provide an estimate of the costs involved. The letter will then request that the client signs and return a copy of the agreement to the auditor. This will allow the auditing process to run more smoothly and reduce any unexpected surprises that might occur.
The letter will also include a mediation clause that will help to resolve any legal disputes. This will prevent the need for any formal legal action and save time and money for both parties. It is essential that the letter be signed by an authorized member of the client’s board of directors to document their approval.