Summary: An audit engagement letter from a CA firm to a client confirms the terms of an agreement to audit financial statements for a specific fiscal year. The letter outlines the audit’s objective, which is to provide an opinion on the fairness and accuracy of the financial statements in accordance with professional standards and legal requirements. It details the scope of the audit, which includes examining evidence on a test basis and evaluating accounting principles and internal controls. The document clarifies the separate responsibilities of both the management and the auditor. Management is responsible for preparing the financial statements and ensuring access to all necessary records, while the auditor is responsible for conducting the audit with professional skepticism and independence. The letter also specifies the deliverables (auditor’s report and management letter), the timeline, and the fees. Finally, it includes a confidentiality clause and a section for the client to formally acknowledge and accept the terms of the engagement.
Audit Engagement Letter
[Your CA Firm Name]
[Address]
[City, State, PIN]
[Phone] | [Email] | [Website]
Date: [Insert Date]
To,
The Board of Directors / Management
[Client Company Name]
[Client Address]
[City, State, PIN]
Subject: Engagement Letter for Conducting Financial Audit for FY [XXXX–XXXX]
Dear Sir/Madam,
We are pleased to confirm our acceptance and understanding of the terms and objectives of our engagement to audit the financial statements of [Client Company Name], for the financial year ending [Insert Date]. This letter sets out the basis on which [Your CA Firm Name] will perform the audit, in accordance with applicable professional standards and relevant legal and regulatory requirements.
1.Objective of the Audit
Our objective is to express an opinion on whether the financial statements of [Client Company Name] give a true and fair view, in all material respects, in accordance with the applicable financial reporting framework, and are free from material misstatement, whether due to fraud or error.
2. Scope of the Audit
The audit will be conducted in accordance with:
- Standards on Auditing (SAs) issued by the ICAI (or ISA where applicable)
- Companies Act, 2013 (if applicable)
- Relevant accounting standards (e.g., Ind AS, AS, IFRS)
- Applicable tax and regulatory laws, where required
The audit will include examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. It will also include:
- Assessing the accounting principles used and significant estimates made by management
- Evaluating the overall presentation of the financial statements
- Reviewing internal control systems relevant to the audit
- Assessing compliance with statutory and regulatory obligations
3. Responsibilities of Management
The responsibility for the preparation and presentation of the financial statements lies with the management of the Company, including:
- Ensuring that the financial statements are free from material misstatement, whether due to fraud or error
- Designing, implementing, and maintaining adequate internal controls
- Providing access to all relevant documents, records, and personnel for audit purposes
- Confirming the completeness of information provided
- Making all financial records and related information available to us on a timely basis
4. Auditor’s Responsibilities
As auditors, we will:
- Conduct the audit in accordance with applicable auditing standards
- Plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement
- Maintain independence as per the ICAI Code of Ethics and relevant regulations
- Communicate to management any significant audit findings, internal control weaknesses, or non-compliance issues
- Issue an audit report containing our opinion on the financial statements
We are not responsible for detecting all instances of fraud or error, although we will report any material misstatements we may uncover during the audit.
5. Deliverables
At the conclusion of the audit, we will provide the following:
- Independent Auditor’s Report
- Management Letter highlighting internal control deficiencies or areas for improvement (if applicable)
- Audit Summary or discussion report (optional, as agreed)
6. Timeline
The audit fieldwork is expected to begin on or around [Insert Date] and to be completed by [Insert Date]. Timely cooperation from your team will be essential to ensure completion within the agreed schedule.
7. Fees and Payment Terms
Our professional fees for the audit engagement will be:
INR [Amount] + Applicable Taxes
Out-of-pocket expenses (e.g., travel, lodging, printing) will be billed separately at actuals with prior approval.
8. Confidentiality
We will maintain the confidentiality of all client information obtained during the engagement in accordance with professional standards, unless disclosure is required by law, court order, or regulatory authority.
9. Confirmation and Acceptance
Please acknowledge your agreement with the terms of this engagement by signing and returning a copy of this letter.
We look forward to working with you.
Yours sincerely,
For [Your CA Firm Name]
Authorized Signatory
[Name of Partner]
[Designation]
[Membership No.]
Date: ___________
Acknowledgement and Acceptance
We acknowledge and accept the terms of this engagement as outlined above.
For [Client Company Name]
Authorized Signatory: _____________________
Name:
Designation:
Date:
Author Bio
