Overview
An engagement letter is a written agreement that describes the business relationship to be entered into by a client and a company. The letter details scope of the agreement, type of report, terms for both parties, and costs. The purpose of an engagement letter is to set expectations on both sides of the agreement. The client engagement letter is the basis for audit opinions and critical audit matters. Each one is unique to the client.
Directions
Begin by reading Appendix C from PCAOB found in the Supporting Materials section. You will then use the Client Engagement Notes provided in Supporting Materials to fill in the client engagement letter.
Specifically, you must address each section of the client engagement letter using the following rubric criteria:
Describe the scope of the audit objective.
Identify the type of report to be issued.
- Explain the auditor's responsibilities and terms for this agreement.
- Explain management’s responsibilities and terms for this agreement.
- Explain the estimated fee schedule.