ASA 210 - Terms of Audit Engagements - April 2006
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Introduction
4 The purpose of this Auditing Standard is to establish mandatory requirements and to provide explanatory guidance on:
(a) agreeing and documenting the terms of the audit engagement with the entity; and
(b) the auditor’s response to a request by the entity to change the terms of the audit engagement to one that provides a lower level of assurance.
5 The auditor shall agree on the terms of the audit engagement with the entity, which shall be recorded in writing by the auditor and forwarded to the entity. When the audit engagement is undertaken pursuant to legislation, the minimum applicable terms are those contained in the legislation.
6 The agreed terms are ordinarily recorded in an audit engagement letter but may also be recorded in another suitable form of contract.
7 This Auditing Standard is intended to assist the auditor in the preparation of an engagement letter relating to an audit of a financial report.
8 In some instances, the objective and scope of an audit and the auditor’s obligations are established by law. For example, the objective of the audit of a financial report of certain entities is established by the Corporations Act 2001. Even in those situations, auditors may still find engagement letters informative for their clients.