ICAEW ARF · Chapter 2 · Question 3 of 8
What is the main purpose of an audit engagement letter?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) To confirm in writing the agreed terms of the engagement, including the responsibilities of the auditor and of management
Explanation
The engagement letter records the agreed terms of the audit, such as its objective and scope, the respective responsibilities of auditor and management, the framework used and the form of reports expected. This reduces the risk of misunderstanding. Control deficiencies are reported separately, detailed procedures are in the audit plan, and the opinion is in the auditor's report.
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