Engagement Letter

Audit engagements may only be accepted when the auditor considers whether ethical requirements such as independence and professional competence will be satisfied and when the engagement exhibits certain characteristics including establishing that certain preconditions for an audit are present. To establish whether the preconditions for an audit are present the auditor determines whether the financial reporting framework to be applied in the preparation of the financial statements is acceptable.
If the preconditions for an audit are not present unless required by law or regulation to do so the auditor shall not accept the proposed audit engagement:

• If they have determined that the financial reporting framework to be applied in the preparation of the financial statements is unacceptable.

• If the agreement of management and where appropriate those charged with governance that it acknowledges and understands it responsibilities as set out in ISA 210.6 (see Section 1.3) has not been obtained.

Performing initial acceptance procedures at the beginning of the current audit engagement means that such procedures are completed prior to agreeing the terms of the audit engagement in writing and prior to performing other significant activities. For continuing audit engagements it may be effective and efficient to perform such initial procedures shortly after (or in connection with) the completion of the previous audit.