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For audit engagements

An audit engagement letter that meets the standard

Of all the engagement letters a firm sends, this is the one whose contents are least optional. The auditing standards say what it must contain.

ISA (UK) 210 requires the terms of an audit engagement to be agreed and recorded in writing, and it is specific about what has to be in there: the objective and scope of the audit, the responsibilities of the auditor and of management, the applicable financial reporting framework, and the expected form of any report.

That makes the audit letter less a matter of firm style than the others on this site. The template below is organised around those requirements, in plain language, so a client can read it without a translator.

Free download

Audit engagement letter

The full letter as a PDF, written for the United Kingdom and organised around ISA (UK) 210.

Download the PDF

No email required. Or fill one in and we will complete it for you.

What ISA (UK) 210 expects to see

These are not stylistic choices. An audit engagement letter that omits them is deficient, whatever else it says.

  1. 1

    The objective and scope of the audit

    Stated plainly: an opinion on whether the financial statements are presented fairly, in all material respects, in accordance with the applicable framework — not a guarantee, and not a search for fraud.

  2. 2

    The auditor's responsibilities

    The audit is planned and performed to obtain reasonable, not absolute, assurance. Say so, and say why: because of the inherent limitations of an audit and of internal control, a material misstatement may not be detected.

  3. 3

    Management's responsibilities

    Preparation of the financial statements, internal control, and providing access to everything relevant — records, additional information, and unrestricted access to people. This is the clause that matters when an audit is obstructed.

  4. 4

    The reporting framework and the expected report

    Which framework the statements are prepared under, and the expected form and content of the report, with a note that the form may change depending on what the audit finds.

The audit engagement letter

Written for United Kingdom. The download is the same text as a PDF you can put on your letterhead.

[Firm letterhead]

[Date]

To the [Board of Directors / Audit Committee] of [Client name]

Dear [Client contact],

The engagement

You have requested that we audit the financial statements of [Client name], which comprise the balance sheet as at [date] and the related statements of income, changes in equity and cash flows for the year then ended, and the related notes. We are pleased to confirm our acceptance and our understanding of this engagement.

The objective and scope of the audit

The objective of our audit is to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with [the applicable financial reporting framework].

We will conduct the audit in accordance with ISA (UK) 210 and the other standards applicable to audits in the United Kingdom. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

The inherent limitations of an audit

Because of the inherent limitations of an audit, together with the inherent limitations of internal control, an unavoidable risk exists that some material misstatements may not be detected, even though the audit is properly planned and performed. An audit is not a guarantee and is not designed to detect all fraud or error.

Management's responsibilities

Our audit will be conducted on the basis that management, and where appropriate those charged with governance, acknowledge and understand their responsibility for the preparation and fair presentation of the financial statements in accordance with [the framework]; for such internal control as they determine necessary; and for providing us with access to all information relevant to the preparation of the financial statements, additional information we request, and unrestricted access to persons within the entity from whom we determine it necessary to obtain audit evidence.

As part of our audit we will request written confirmation of these responsibilities and of certain representations made to us during the engagement.

Reporting

We will issue a written report on the financial statements. The form and content of that report may need to change in the light of our findings, and circumstances may arise in which we are unable to issue a report or must modify our opinion.

Fees

Our fees are based on the time required by the individuals assigned to the engagement, at [rate], estimated at [amount] in pounds sterling for this audit. That estimate assumes the accounting records are complete, the requested schedules are prepared by [date], and no significant difficulties are encountered. We will discuss any significant departure with you before it is incurred.

Other terms

This letter is effective for future years unless it is terminated, amended or superseded. We keep your information confidential except where the law or our professional body requires disclosure, hold it in accordance with the UK GDPR, and retain our audit documentation for the period our standards require.

Agreement

Please sign and return the attached copy to indicate your acknowledgement of, and agreement with, the arrangements for our audit of the financial statements.

[Name], [Firm name]

Acknowledged on behalf of [Client name]:

Signature ______________________ Date ____________

Before you use this

Supplied as-is, with no guarantee. These templates are general information, not legal advice, and not a substitute for it. Have your own legal adviser review and adapt one to your practice and your jurisdiction before you put it in front of a client. FirmHello accepts no responsibility or liability for any use made of them.

Where audit letters fall short

Recycled from a non-audit engagement

A compilation letter with the word "audit" swapped in omits almost everything ISA (UK) 210 requires. The two documents are not variants of each other.

Silent on access to people

Access to records is usually covered; unrestricted access to people is often not, and it is the clause you need when an audit becomes difficult.

Rolled forward for a decade

A letter that is effective for future years still needs reviewing when the entity, the framework, the risk or the fee basis changes.

Other engagement letters

What it is Engagement letters Accounting Accounting Forensic accounting Forensic

Questions about audit engagement letters

Does an audit engagement letter have to be reissued every year?

Not necessarily. The standards allow a letter to remain effective for recurring audits, but they also expect you to assess each year whether circumstances require the terms to be revised — and to remind the entity of the existing terms where you do not reissue.

Who should the letter be addressed to?

Those charged with governance — typically the board or the audit committee — rather than the finance team who will be supplying the evidence. Acknowledgement should come from someone with the authority to give it.

What if management will not accept the responsibilities described?

Then the standards contemplate that you do not accept the engagement. A refusal to acknowledge responsibility for the financial statements, for internal control, or for providing access is not a negotiating position; it is a reason to decline.

Is this template enough on its own?

No. It is a starting point that follows the structure of ISA (UK) 210. Your own methodology, your professional body's guidance and your legal adviser all have a say before it goes out.

The letter is the easy half

Sending it, getting it back signed, and finding it again in two years is the half that eats the week. That is what the portal is for.

No card and no sales call. If you would rather tell us about your firm first, use the longer form.