Audit Acceptance Letter

The audit acceptance letter enumerates the related deliverables for the audit, including an evaluation of internal controls, and the preparation of the audit report and opinion letter at the conclusion of the engagement. 

How to you write an audit acceptance letter?

An engagement letter for auditing serves summarizes the contract in an easier-to-understand way for both the client and the auditor. In such a letter, the following is mentioned:

• the scope of work to be performed,
• the timeline in which it will be provided,
• the professional fee structure,
• and the limitations of the engagement.

It is a professional way to make sure both parties involved understand what is expected. From the provider's side, it summarizes professional services that are delivered when the audit is performed. Often it’s sent by lawyers and CPAs, to establish a relationship with a client, define the terms during the length of the relationship, and detail the work to be done. For the client, it's important to confirm they can accept the terms and conditions that are defined by the service provider and the client. 

Consequently, it is important to properly document the agreement for services prior to starting work on an audit.

The following needs to be explained:

1. Identify the scope of services to be rendered;
2. Establish the timeline for performing audit and related fieldwork for scheduling purposes;
3. Mention audit-related regulatory deadlines;
4. Clearly establish the professional fee structure (estimate of the total fees and costs, as well as specific provisions for travel and other direct cost reimbursements). 
5. Disclaim any obligation regarding fraud detection
6. Include a mediation or binding arbitration clause to help resolve any dispute in the unfortunate event that a legal dispute does arise 
7. Approval by the client with receiving signed copies by a board member.

Sample Audit acceptance letter :

The following letter for a financial audit of general-purpose shows an example that is in accordance with International Financial Reporting Standards. This letter is to be used as a guide in conjunction with the considerations outlined in this ISA and will need to be varied according to individual requirements and circumstances:

To Board of Directors / Dear {{Recipient Name}},

You have requested that we audit the financial statements of {{Year}}, which comprise the balance sheet and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. We are pleased to confirm our acceptance and our understanding of this engagement by means of this letter. Our audit will be conducted with the objective of our expressing an opinion on the financial statements.

We will conduct our audit in accordance with International Standards on Auditing.

Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Because of the test nature and other inherent limitations of an audit, together with the inherent limitations of any accounting and internal control system, there is an unavoidable risk that even some material misstatements may remain undiscovered.

In making our risk assessments, we consider internal control relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. However, we expect to provide you with a separate letter concerning any material weaknesses in the design or implementation of internal control over financial reporting that come to our attention during the audit of the financial statements.

We remind you that the responsibility for the preparation of financial statements that present fairly the financial position, financial performance and cash flows of the company in accordance with International Financial Reporting Standards is that of the management of the company. Our auditors’ report will explain that management is responsible for the preparation and the fair presentation of the financial statements in accordance with the applicable financial reporting framework and this responsibility includes:

• Designing, implementing and maintaining internal control relevant to the preparation of financial statements that are free from misstatement, whether due to fraud or error;

• Selecting and applying appropriate accounting policies; and

• Making accounting estimates that are appropriate in the circumstances. 

As part of our audit process, we will request from management written confirmation concerning representations made to us in connection with the audit.

We look forward to full cooperation from your staff and we trust that they will make available to us whatever records, documentation and other information are requested in connection with our audit.

1) The audit will be conducted from {{start date}} till {{end date}}.

2) Area of audit: {{list of departments of entities included in the audit}}

3) Audit scope: {{the type of the audit: financial, fraud, etc. what will be audited}}

4) Audit Standard: {{the framework used in the audit process}}

5) Exclusions: {{what is not included in the audit}}

6) Deliverables: {{a brief description of outcomes and the reports that will be delivered}}

Going further from here, we propose the following action plan:

- Your finance department will provide;

- Our team will be given access to;

- Additional points.

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 audit of the financial statements. Thank you again for your trust. Looking forward to doing business with you.

Yours sincerely,

Signature

Check out this Audit confirmation letter template now for your reference when accepting an audit. Have a look at this sample Audit Acceptance Letter and send it to the auditor after confirmation. Download this acceptance letter now.