1. M ODULE 12 F INANCIAL S TATEMENT A UDIT E NGAGEMENT L ETTER CA. S RIPRIYA K UMAR Practical/ Article Training

2. L EARNING O BJECTIVES Relevant SA Why Engagement Letters Form and Contents Signing of Engagement Letter 2

3. W HAT IS AN E NGAGEMENT L ETTER

4. A N E NGAGEMENT L ETTER IS THE FORMAL RECORD OF THE T ERMS OF E NGAGEMENT OF AN AUDITOR WITH A CLIENT. SA 210 DEALS WITH “A GREEING THE T ERMS OF A UDIT E NGAGEMENTS ” Standard on Auditing for EL

5. W HY E NGAGEMENT L ETTER 5 The objective and Scope of the engagement Responsibility of the management Responsibility of the auditor Identification of the applicable financial reporting framework if any Form and content of Auditors work

6. A SAMPLE E NGAGEMENT L ETTER

7. A DDRESSED TO THE B O D 7 The Objective and scope of the audit: You have requested that we audit the financial statements of {Company} which comprise the Balance sheet as at 31 st March xxxx and the Statement of profit and loss account and Cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory information. We are pleased to confirm our acceptance and our understanding of this audit engagement by means of this letter. Our audit will be conducted with the objective of our expressing an opinion on the financial statements.

8. T HE RESPONSIBILITY OF THE AUDITOR : 8 We will conduct our audit in accordance with the standards on auditing (SAs) issued by the Institute of Chartered Accountants of India (ICAI). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

9. T HE ENGAGEMENT LETTER ALSO CONTAINS THE FOLLOWING INFORMATION - T HE RESPONSIBILITY OF THE MANAGEMENT - F EES - R EPORTING R EQUIREMENTS A COPY OF THE ENGAGEMENT LETTER ISSUED BY THE AUDITOR SHOULD BE SIGNED AND RETURNED BY THE CLIENT AS A TOKEN OF ACCEPTANCE OF THE TERMS OF THE AUDIT ENGAGEMENT BETWEEN THE PARTIES INTER SE

10. W HAT N EXT ? W HAT DO I D O ? I understand Audit Risk!

11. T HANK Y OU Practical/ Article Training