Document ID: chunk:federal_register_of_legislation:F2023C00337:reg:1:p12
Version: federal_register_of_legislation:F2023C00337
Segment Type: reg
Provision Reference: reg 1 (pt 12/23)
Character Range: 40843–43910

and relevant law or regulation.

Audit Engagement Letter or Other Form of Written Agreement[16] (Ref: Para. 10‑11)

A23.         It is in the interests of both the entity and the auditor, that the auditor sends an audit engagement letter before the commencement of the audit to help avoid misunderstandings with respect to the audit.  In some countries, however, the objective and scope of an audit and the responsibilities of management and of the auditor may be sufficiently established by law, that is, they prescribe the matters described in paragraph 10.  Although in these circumstances paragraph 11 permits the auditor to include in the engagement letter only reference to the fact that relevant law or regulation applies and that management acknowledges and understands its responsibilities as set out in paragraph 6(b), the auditor may nevertheless consider it appropriate to include the matters described in paragraph 10 in an engagement letter for the information of management.

Form and Content of the Audit Engagement Letter

A24.         The form and content of the audit engagement letter may vary for each entity.  Information included in the audit engagement letter on the auditor's responsibilities may be based on ASA 200.[17]  Paragraphs 6(b) and 12 deal with the description of the responsibilities of management.  In addition to including the matters required by paragraph 10, an audit engagement letter may make reference to, for example:

           * Elaboration of the scope of the audit, including reference to applicable legislation, regulations, Australian Auditing Standards, and ethical and other pronouncements of professional bodies to which the auditor adheres.

           * The form of any other communication of results of the audit engagement.

           * The requirement for the auditor to communicate key audit matters in the auditor's report in accordance with ASA 701.[18]

           * The fact that 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.

           * Arrangements regarding the planning and performance of the audit, including the composition of the audit team.

           * The expectation that management will provide written representations (see also paragraph A13).

           * The expectation that management will provide access to all information of which management is aware that is relevant to the preparation of the financial report, including an expectation that management will provide access to information relevant to disclosures.

           * The agreement of management to make available to the auditor the draft financial report, including all information relevant to their preparation, whether obtained from within or outside of the general and subsidiary ledgers (including all information relevant to the preparation of disclosures), and