Document ID: chunk:federal_register_of_legislation:F2023C00337:reg:1:p14
Version: federal_register_of_legislation:F2023C00337
Segment Type: reg
Provision Reference: reg 1 (pt 14/23)
Character Range: 46329–49313

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. 11‑12)

A28.         If, in the circumstances described in paragraphs A23 and A24, the auditor concludes that it is not necessary to record certain terms of the audit engagement in an audit engagement letter, the auditor is still required by paragraph 11 to seek the written agreement from management that it acknowledges and understands that it has the responsibilities set out in paragraph 6(b).  However, in accordance with paragraph 12, such written agreement may use the wording of the law or regulation if such law or regulation establishes responsibilities for management that are equivalent in effect to those described in paragraph 6(b).  The accounting profession, audit standards setter, or audit regulator in a jurisdiction may have provided guidance as to whether the description in law or regulation is equivalent.

Considerations specific to public sector entities

A29.         Law or regulation governing the operations of public sector audits generally mandate the appointment of a public sector auditor and commonly set out the public sector auditor's responsibilities and powers, including the power to access an entity's records and other information.  When law or regulation prescribes in sufficient detail the terms of the audit engagement, the public sector auditor may nonetheless consider that there are benefits in issuing a fuller audit engagement letter than permitted by paragraph 11.

Recurring Audits (Ref: Para. 13)

A30.         The auditor may decide not to send a new audit engagement letter or other written agreement each period.  However, the following factors may make it appropriate to revise the terms of the audit engagement or to remind the entity of existing terms:

           * Any indication that the entity misunderstands the objective and scope of the audit.

           * Any revised or special terms of the audit engagement.

           * A recent change of senior management.

           * A significant change in ownership.

           * A significant change in nature or size of the entity's business.

           * A change in legal or regulatory requirements.

           * A change in the financial reporting framework adopted in the preparation of the financial report.

           * A change in other reporting requirements.

Acceptance of a Change in the Terms of the Audit Engagement

Request to Change the Terms of the Audit Engagement (Ref: Para. 14)

A31.         A request from the entity for the auditor to change the terms of the audit engagement may result from a change in circumstances affecting the need for the service, a misunderstanding as to the nature of an audit as originally requested or a restriction on