Document ID: chunk:federal_register_of_legislation:F2023C00337:reg:1:p13
Version: federal_register_of_legislation:F2023C00337
Segment Type: reg
Provision Reference: reg 1 (pt 13/23)
Character Range: 43628–46628

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 the other information,[19] if any, in time to allow the auditor to complete the audit in accordance with the proposed timetable.

           * The agreement of management to inform the auditor of facts that may affect the financial report, of which management may become aware during the period from the date of the auditor's report to the date the financial report is issued.

           * The basis on which fees are computed and any billing arrangements.

           * A request for management to acknowledge receipt of the audit engagement letter and to agree to the terms of the engagement outlined therein.

A25.         When the auditor is not required to communicate key audit matters, it may be helpful for the auditor to make reference in the terms of the audit engagement to the possibility of communicating key audit matters in the auditor's report and, in certain jurisdictions, it may be necessary for the auditor to include a reference to such possibility in order to retain the ability to do so. (Ref: Para. 10(e))

A26.         When relevant, the following points could also be made in the audit engagement letter:

           * Arrangements concerning the involvement of other auditors and experts in some aspects of the audit.

           * Arrangements concerning the involvement of internal auditors and other staff of the entity.

           * Arrangements to be made with the predecessor auditor, if any, in the case of an initial audit.

           * A reference to, and description of, the auditor's responsibilities under law, regulation or relevant ethical requirements that address reporting identified or suspected non‑compliance with laws and regulations to an appropriate authority outside the entity.

           * Any restriction of the auditor's liability when such possibility exists.

           * A reference to any further agreements between the auditor and the entity.

           * Any obligations to provide audit working papers to other parties.

An example of an audit engagement letter is set out in Appendix 1.

Audits of Components

A27.         When the auditor of a parent entity is also the auditor of a component, the factors that may influence the decision whether to send a separate audit engagement letter to the component include the following:

           * Who appoints the component auditor;

           * Whether a separate auditor's report is to be issued on the component;

           * Legal requirements in relation to audit appointments;

           * Degree of ownership by parent; and

           * Degree of independence of the component management from the parent entity.

Responsibilities of Management Prescribed by Law or Regulation (Ref: Para.