Engagement letter

Engagement letter is written by the auditor and received by the management of the client before the start of audit assignment. The purpose engagement letter is to document and confirm the terms of engagement as agreed between the auditor and the client. All the commitments between client and auditor in the engagement letter. Letter is written to the responsible person of the company e.g. CEO and board of directors.

Addresses

The engagement letter is addressed to the board of directors and chief executive in case of company; managing partners in case of partnership; owner in case of sole proprietorship; and head of the organization in other case including autonomous and semi autonomous.

Principal Contents

These are fallowing contents of the engagement letter

1. OBJECT OF AUDIT

Auditor only gives the opinion about the organization .whether or not the statement shows a true and fair view.

2. MANAGEMENT RESPONSIBILITY

Management is responsible for financial statements .the preparation and accuracy of financial statement is the responsibility of the management.

3. SCOPE OF AUDIT

Auditor should mention his scope of auditing .

The purpose of Management Representation Letter (MRL) is to document acknowledgement by the management indicating their responsibility of financial statements and a confirmation that all information has been disclosed to the auditor. It is a formal document that acknowledges that management has made all necessary management representations to the auditor for the auditing.