Audit Engagement letter Essay Example | Topics and Well Written Essays - 1000 words

Audit Engagement letter - Essay Example The key objectives of the audit scope are to analyze whether your consolidated financial statements are true and fair, in all material respect, in line with the provisions of International Accounting Standards. The firm will conduct the audit process in line with the guidelines stated in the International Audit Standards. This will include all recommended tests on accounting records, as well as other procedures we consider necessary to facilitate us in expressing an opinion. If the opinion turns out to be something different other than unqualified, we will immediately notify your company and discuss the reasons in advance. In case we are unable to complete the audit within the stated period of 1.5 months, or have difficulties in expressing the opinion within the stated duration, we may decline to express any opinion or to issue an audit report as a result of this letter. Audit Engagement Checklist Section 1. Auditor’s Report With Regard To Auditor’s Report 2. Audit Proc edures 1. In Reference To Clients Acceptance 2. In Reference To Clients Understanding 3. In Reference To Audit Planning 4. In Reference To Fraud and Errors Considerations 5. In Reference To Internal Control Risks 6. In Reference To Work Done By Other Auditors 7. In Reference To Specialists If Used 8. In Reference To Audit Programs 9. In Reference To Audit Sampling 10. In Reference To Analytical Procedures 11. In Reference To Related Party Transactions 12. In Reference To Illegal Acts 13. In Reference To Audit Documentation 3. Working Papers 1. Significant Audit Areas 2. Cash 3. Receivables 4. Payables 5. Inventories 6. Assets 7. Liabilities 8. Business Consolidations and Combinations 4. Functional Areas 1. Human Resources 2. Key Ethical Requirements 3. Engagement Performance 5. Conclusion (Gupta, 2004. p. 44) The procedures will encompass examination of documentary evidence backing the transactions in the financial statements, physical examinations of assets, direct confirmation of payables and receivables. We will also randomly contact different customers, both creditors and debtors in reference to different assets and liabilities to provide evidence all transactions. The company will also request your company to provide written presentations from your attorneys as a section of the engagement. As we approach the end of the audit assignment, we will need different written presentations from your company about financial statements as well as other related matters (Ron and Rosario, 2007, p. 26). An audit entails testing, on an examination basis, disclosure of the financial statements, and evidence supporting the amounts. Therefore, the audit will entail judgment on the number of transactions to be tested and the target areas. We will also plan and perform the audit to attain reasonable assurance on whether the financial records are free from material misstatements and misrepresentations. This is because an audit avail reasonable assurance, and not absolute assur ance. Obtaining absolute assurance may be expensive and consuming. This is because it involves examining all transactions; it also exposes the task to material errors, which makes it difficult to detect frauds and other deliberate misrepresentations. Another reason why absolute assurance is unnecessary is because the scope does not aim at immaterial errors, illegal acts, and frauds that do not have any material change on the accounting records. This proves that the service cannot be relied on to expose errors