An audit engagement letter is a document that strengthens audit arrangements between clients and auditors. It outlines the responsibilities of both parties and minimizes any possible misunderstandings concerning the scope of the work to be conducted. In addition, it also helps prevent scope creep as the engagement progresses. An effective engagement letter should include terms like the timeline and associated costs, the scope of the audit, the extent of responsibilities, the form of reports to be delivered to the client, and more.
Typically, the engagement letter is signed by an authorized representative from both management and the audit firm. The terms of an engagement letter can be negotiated depending on the nature of the work and the relationship between the client and auditor. However, there are certain terms that are deemed mandatory by the auditing standards and therefore are non-negotiable. These terms are usually related to the extent of the company’s internal controls, management’s obligation to submit assertions and representations, inherent limitations of the audit engagement, etc.
Once the audit engagement letter is completed, it can be included in the client’s work-paper file. This will help prove that both parties had a clear understanding of the responsibilities involved in the work at hand and protects both sides in case legal disputes arise. Use Jotform’s easy-to-use online audit engagement letter template to customize the content, create an automated signing order, add your own branding, and integrate with useful widgets like Google Drive to make sure all your finalized documents are safely stored in one place. audit engagement letter sample