Audit Engagement Letter Australia printable pdf download

Example of an Audit Engagement Letter

(Ref: Para. A23-A24)

The following is an example of an audit engagement letter for an audit of a general purpose financial

report prepared in accordance with Australian Accounting Standards and the Corporations Act 2001. This

letter is not authoritative but is intended only to be a guide that may be used in conjunction with the

considerations outlined in this Auditing Standard. It will need to be varied according to individual

requirements and circumstances. It is drafted to refer to the audit of a financial report for a single

reporting period and would require adaptation if intended or expected to apply to recurring audits (see

paragraph

of this Auditing Standard). It may be appropriate to seek legal advice that any proposed

letter is suitable.

To the appropriate representative of management or those charged with governance of ABC Company:

[The objective and scope of the audit]

You

have requested that we audit the financial report of ABC Company which comprises the statement

of financial position as at 30 June 20X1 and the statement of comprehensive income, statement of

changes in equity and statement of cash flows for the year then ended, and notes comprising a summary

of significant accounting policies and other explanatory information, and the directors' declaration. 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 expressing an opinion on the financial report.

[The responsibilities of the auditor]

We will conduct our audit in accordance with Australian Auditing Standards. Those standards require that

we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance

about whether the financial report is free from material misstatement. An audit involves performing

procedures to obtain audit evidence about the amounts and disclosures in the financial report. The

procedures selected depend on the auditor's judgement, including the assessment of the risks of material

misstatement of the financial report, whether due to fraud or error. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of accounting estimates made by

management, as well as evaluating the overall presentation of the financial report.

Because of the inherent limitations of an audit, together with the inherent limitations of internal control,

there is an unavoidable risk that some material misstatements may not be detected, even though the

audit is properly planned and performed in accordance with Australian Auditing Standards.

In making our risk assessments, we consider internal control relevant to the entity's preparation of the

financial report in order to design audit procedures that are appropriate in the circumstances, but not for

the purpose of expressing an opinion on the effectiveness of the entity's internal control. However, we will

communicate to you in writing concerning any significant deficiencies in internal control relevant to the

audit of the financial report that we have identified during the audit.

[The responsibilities of management and identification of the applicable financial reporting framework (for

purposes of this example, it is assumed that the auditor has not determined that the law or regulation

prescribes those responsibilities in appropriate terms; the descriptions in paragraph

6(b)

of this Auditing

Standard are therefore used).]

Our audit will be conducted on the basis that [management and, where appropriate, those charged with

governance]

acknowledge and understand that they have responsibility:

(a) For the preparation of the financial report that gives a true and fair view in accordance with the

Corporations Act 2001 and Australian Accounting Standards;

(b) For such internal control as [management] determines is necessary to enable the preparation of the

financial report that is free from material misstatement, whether due to fraud or error; and

(i)

Access to all information of which the directors and management are aware that is relevant to the

preparation of the financial report such as records, documentation and other matters;

(ii) Additional information that we may request from the directors and management for the purpose of

the audit; and

Audit Engagement Letter Australia

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