Acceptance of a Change in the Terms of tAcceptance of a Change in the Terms of the Engagement

Acceptance of a Change in the Terms of the Engagement

20 The auditor who, before the completion of the engagement, is requested to change the engagement to one which provides a lower level of assurance, shall consider the appropriateness of doing so.

21 A request from the entity for the auditor to change the terms of the engagement may result from a change in circumstances affecting the need for the service, a misunderstanding as to the nature of the audit or related service originally requested or a restriction on the scope of the engagement, whether imposed by management or caused by circumstances. Under paragraph 26 of this Auditing Standard, the auditor needs to carefully consider the reason given for the request, particularly the implications of a restriction on the scope of the engagement.

22 A change in circumstances that affects the entity’s requirements, or a misunderstanding concerning the nature of the service originally requested, is ordinarily considered to be a reasonable basis for requesting a change in the engagement. In contrast, a change is not considered to be reasonable if it appears that the change relates to information that is incorrect, incomplete or otherwise unsatisfactory.

23 Before agreeing to change the audit engagement to a review[1] or related service engagement, an auditor who was engaged to perform the audit in accordance with Auditing Standards ordinarily considers, in addition to the above matters, any legal or contractual implications of the change.

24 If the auditor concludes that there is reasonable justification to change the terms of the engagement and if the audit work performed complies with the Auditing Standards relevant to the changed terms of the engagement, the report issued would be that appropriate for the revised terms of the engagement. In order to avoid confusing the user, the report would not ordinarily include reference to:

(a) the original engagement; or

(b) any procedures that may have been performed in the original engagement, except where the engagement is changed to an engagement to undertake agreed-upon procedures and thus reference to the procedures performed is a normal part of the report.

25 Where the terms of the engagement are changed the auditor shall agree on the new terms with the entity and confirm them in writing.

26 The auditor shall not agree to a change in the terms of the engagement where there is no reasonable justification for doing so.

27 An example of where there is no reasonable justification might be an audit engagement where the auditor is unable to obtain sufficient appropriate audit evidence regarding receivables and the client asks for the engagement to be changed to a review engagement to avoid a qualified audit opinion or a disclaimer of opinion.