December 11, 2023

An agreement between auditor and client is a document that describes the scope of an audit, outlines reporting requirements, defines fees, and establishes confidentiality provisions. Generally, this document must be signed by both parties before the commencement of an audit. Services companies that offer audit, tax, financial, consulting, and legal help often prepare these documents for clients. These documents mitigate risks by defining the obligations of both parties and providing a legal basis for establishing a professional relationship.

The scope of an agreement should be clearly defined to minimize the possibility of misunderstandings. It should also state that an audit cannot provide absolute assurance regarding the accuracy of a client’s financial statements and that it is management’s responsibility to prevent and detect fraud and error. The document should also include a statement that the auditor will seek written representation from management on matters having a material effect on the financial statements.

Another important aspect of an agreement is the basis for determining audit fees and billing arrangements. The document should also address the auditor’s obligation to maintain the confidentiality of client information and compliance with data protection regulations.

Lastly, an agreement should specify whether the document is subject to any applicable arbitration or dispute resolution procedures. Typically, the agreement will provide that it is governed by and construed in accordance with English/Scottish/other law.

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