EXAMPLE OF AN ENGAGEMENT LETTER FOR A REEXAMPLE OF AN ENGAGEMENT LETTER FOR A REVIEW OF A FINANCIAL REPORT

## EXAMPLE OF AN ENGAGEMENT LETTER FOR A REVIEW OF A FINANCIAL REPORT The following letter is not intended to be a standard letter. It is to be used as a guide only and will need to be adapted according to individual requirements and circumstances. This illustrative letter is written in the context of a half‑year financial report under the Corporations Act 2001. To \[those charged with governance:[\[10\]](#_ftn15)\] Scope You have requested that we review the half‑year financial report[\[11\]](#_ftn16) of \[name of entity\], which comprises the statement of financial position as at 31 December 20XX, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the six‑month[\[12\]](#_ftn17) period ended on that date, and notes comprising significant accounting policies and other explanatory information and the directors’ declaration. We are pleased to confirm our acceptance and our understanding of the terms and objectives of our engagement by means of this letter. Our review will be conducted in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity with the objective of providing us with a basis for reporting whether we have become aware of any matter that makes us believe that the half‑year financial report does not comply with the Corporations Act 2001, including giving a true and fair view of the financial position and its performance, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulation 2001.[\[13\]](#_ftn18) Such a review consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures and does not, ordinarily, require corroboration of the information obtained. The scope of a review of a financial report is substantially less than the scope of an audit conducted in accordance with Auditing Standards whose objective is the expression of an opinion regarding the financial report and accordingly, we shall express no such opinion. ASRE 2410 requires us to also comply with the ethical requirements relevant to the audit of the annual financial report of the entity. We expect to report on the half‑year financial report[\[14\]](#_ftn19) as follows: \[Include text of sample auditor’s review report - see Appendix 3 or 4 as appropriate.\] The directors \[those charged with governance[\[15\]](#_ftn20)\] of the \[company/registered scheme/disclosing entity\] are responsible for the preparation of the half‑year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors \[those charged with governance\] determine is necessary to enable the preparation of the half‑year financial report that is free from material misstatement, whether due to fraud or error. As part of our review, we shall request written representations from management concerning assertions made in connection with the review. We shall also request that where any document containing the half‑year financial report indicates that the half‑year financial report has been reviewed, our review report will also be included in the document. The directors \[those charged with governance\] of the \[company/registered scheme/disclosing entity\] acknowledge and understand they have responsibility to provide us with: 1. access to information relevant to the preparation of the half‑year financial report; 2. additional information that we may request for the purposes of the review engagement; and 3. unrestricted access to persons from whom we determine it is necessary to obtain evidence. A review of the half‑year financial report does not provide assurance that we shall become aware of all significant matters that might be identified in an audit. Further, our engagement cannot be relied upon to disclose whether fraud or errors, or illegal acts exist. However, we shall inform you of any material matters that come to our attention. Independence We confirm that, to the best of our knowledge and belief, we currently meet the independence requirements of the Corporations Act 2001 and the Accounting Professional and Ethics Standard Board APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (The Code) in relation to the review of the half‑year financial report. In conducting our review of the half‑year financial report, should we become aware that we have contravened the independence requirements of the Corporations Act 2001, we shall notify you on a timely basis. As part of our review process, we shall also provide you with a written independence declaration as required by the Corporations Act 2001. The Corporations Act 2001 includes specific restrictions on the employment relationships that can exist between the reviewed entity and its auditors. To assist us in meeting the independence requirements of the Corporations Act 2001, and to the extent permitted by law and regulation, we request you discuss with us: - The provision of services offered to you by \[insert firm name\] prior to engaging or accepting the service; and - The prospective employment opportunities of any current or former partner or professional employee of \[insert firm name\] prior to the commencement of formal employment discussions with the current or former partner or professional employee. Presentation of the reviewed half‑year financial report in electronic format It is our understanding that \[the entity\] intends to publish a hard copy of the reviewed half‑year financial report and the auditor’s review report for members, and to electronically present the reviewed half‑year financial report and the auditor’s review report on its internet web site. When information is presented electronically on a web site, the security and controls over information on the web site should be addressed by \[the entity\] to maintain the integrity of the data presented. The examination of the controls over the electronic presentation of reviewed financial information on the entity’s web site is beyond the scope of the review of the half‑year financial report. Responsibility for the electronic presentation of the half‑year financial report on the entity’s web site is that of the \[governing body of the entity\]. Fees \[Insert additional information here regarding fee arrangements and billings, as appropriate.\] We look forward to full co‑operation with your staff and we trust that they will make available to us whatever records, documentation and other information are requested in connection with our review. \[This letter will be effective for future years unless it is terminated, amended or superseded.[\[16\]](#_ftn21)\] Please sign and return the attached copy of this letter to indicate that it is in accordance with your understanding of the arrangements for our review of the half‑year financial report. Yours faithfully, (signed) ………………………. Name and Title Date Acknowledged on behalf of \[entity\] by (signed) ………………………. Name and Title Date