Audit Engagement Letter

Ref: Date : The Board of Directors (Company Name) (Address) Gentlemen, AUDIT FOR THE YEAR ENDING 30 JUNE _______  You have requested that we audit the balance sheet of the Company as of June 30, _____ and the related profit and loss account, statements of cash flows and changes in equity for the period/year then ending. We are pleased to confirm our acceptance and our understanding understanding of this engagement engagement by means of this letter. 1. Audit 1.1 1.1 We will will cond conduc uctt our our audi auditt in acco accord rdan ance ce with with Audi Auditi ting ng Stand Standar ards ds as appli applica cabl ble e in Paki Pakist stan an with with the objective of expressing an opinion whether the financial statements conform with approved accounting standards as applicable in Pakistan, and, give the information required by the Companies Ordinance, 1984, in the manner so required and respectively give a true and fair view of the state of the Company’s affairs as at June 30, ______ and of the profit, its cash flows and changes in equity for the period/year  then ended. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting supporting the amounts amounts and disclosures in the financial financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 1.2 1.2 Our repor reportt will be be addre addresse ssed d to the Boar Board d of Direct Directors ors of the the Comp Company any.. We canno cannott provid provide e assura assurance nce that that an unqua unqualif lifie ied d opinio opinion n will will be render rendered, ed, since since circum circumsta stance nces s may may arise arise in which which it would would be necessary necessary for us to modify our report or withdraw withdraw from the engagemen engagement. t. In such circumstance circumstances, s, our  findings or reasons for withdrawal will be communicated communicated to the Board of Directors. 1.3 1.3 In view view of the test test nature nature and and other other inher inheren entt limitat limitation ions s of an audit, audit, toge togethe therr with the the inhere inherent nt limita limitatio tions ns of any accounting and internal control system, there is an unavoidable risk that even some material misstatements may remain undiscovered. undiscovered. 1.4 1.4 In addi additi tion on to our our repor reportt on the finan financi cial al stat statem emen ents ts,, we expe expect ct to provi provide de you you with with a sepa separa rate te lett letter  er  concerning any material weaknesses in accounting and internal control systems, which come to our  notice. The extent to which we examine internal controls, and hence have the opportunity to observe weaknesses, is impacted by our determination of the most efficient audit approach. We are not required by auditing auditing standards standards to make an examinat examination ion of internal internal controls controls beyond beyond that that which we make in determining the nature, extent and timing of our other audit procedures, and we have not been engaged to report on the Company’s internal internal control structure. 1.5 1.5 The Comp Company any will will make make availa available ble to to us all record records, s, docum documen entat tation ion,, and infor informa matio tion n includ includin ing g minute minutes s of  all Management and Board of Directors’ meetings we request in connection with our audit, that all material information will be disclosed to us, and that we will have the full cooperation of the Company’s personnel. 1.6 The responsib responsibility ility for the preparat preparation ion of finan financial cial statemen statements ts includ including ing adequat adequate e disclosu disclosures res is is that that of of the the management of the Company. This includes the maintenance of adequate accounting records and internal controls, the selection and application of accounting policies, and the safeguarding of the assets of the Company. Company. Manage Management ment is also responsi responsible ble for identifyin identifying g and ensuring ensuring that the Company Company complies with laws and regulations applicable to its activities. As part of our audit process, we will request from management written confirmation concerning representations made to us in connection with the audit. 1.7 1.7 In addit addition ion,, ISA 240, 240, “The “The Audit Auditor’ or’s s Respon Responsib sibili ility ty to Consi Consider der Frau Fraud d and Erro Errorr in an Audit Audit of of Financ Financia iall Statements” requires that we obtain specific written representations from management that: , (a) it acknowle acknowledges dges its its responsi responsibilit bility y for the the impleme implementati ntation on and and operati operations ons of accou accountin nting g and intern internal al control systems that are designed to prevent and detect fraud and error; (b) it believe believes s the effect effects s of those those uncorre uncorrecte cted d financia financiall statem statemen entt missta misstatem temen ents ts aggreg aggregate ated d by us during the audit are immaterial, both individually and in the aggregate, to the financial statements taken as a whole; (c) (c) it has discl disclos osed ed to us all all sign signif ific ican antt fact facts s rela relati ting ng to any any fraud frauds s or suspe suspect cted ed fraud frauds s know known n to management that may have affected the entity; and (d) it has disclo disclosed sed to us the the results results of its its assessm assessment ent of of the risk risk that that the financ financial ial statem statements ents may may be materially misstated as a result of fraud. These specific items will be included in our request for written confirmation concerning representations made to us in connection with the audit. 2. Other terms and Conditions 2.1 If you require require us us to complete complete our work work under under this engageme engagement nt contrac contractt or, any part of it, it, by a specific specific date date or time, you will inform us in writing of your requirement. Whilst we will make every effort to complete such work by the date specified, it is imperative that meeting any such requirement will rely on you providing reasonable notice of your requirement and the timely provision of such information as we may need to complete the work concerned. 2.2 2.2 In conne connecti ction on with with this this engag engageme ement, nt, you you agree agree that that the the liabil liability ity to the the Compa Company ny of this this firm, firm, its partn partners ers,, directors, employees, and agents (in contract or under statute or otherwise) for any loss or damage suffered by the Company arising out of, or in connection with this engagement, however the loss or  damage that is caused, including our negligence but not our wilful default, shall be limited to the amount of fee charged for the engagement. 2.3 Tariq Mir & Co. will not be be respons responsible ible or liable liable if informa information tion material material to our our task task is withheld withheld or concea concealed led from us or wrongly represented to us. 2.4 2.4 We will will trea treatt as such such all all conf confid iden enti tial al propr proprie ieta tary ry infor informa mati tion on obta obtain ined ed from from the the Comp Compan any y and and will will not disclose such information to others, except to those persons engaged in providing services to you, or use such information except in connection with the performance of the services agreed to in this letter. This 2 undertaking shall not apply to any of t he information that we are required by law or by the requirements requirements of  any regulators or by specific professional standards to disclose or that is in or hereafter enters the public domain. Under the directive issued by the Institute of Chartered Accountants of Pakistan to audit firms, our working paper files pertaining to the audit of the Company may be subject to Quality Control Review (QCR) without any reference to the Company. 2.5 2.5 You will will indem indemnif nify y and hold hold harm harmles less s Tariq Tariq Mir & Co, its its propri proprieto etor, r, agen agents, ts, and and employ employees ees from from,, and against, any and all costs, expenses, losses, claims, demands, actions, suits, or proceedings paid, incurred, or suffered or made or initiated against it by any third party arising out of, or in connection with, this engagement regardless of whether the loss or damage is caused other than through our fraud or  wilful default. 3. Fee 3.1 3.1 Our fees fees are are base based d on the the time time requir required ed by the the indiv individu iduals als assig assigne ned d to the enga engage gemen mentt plus plus direct direct out out of  pocket expenses. Individual hourly rates vary according to the degree of responsibility involved and the experi experien ence ce and and skill skill requir required. ed. Our audit audit fees fees for the the year year ending ending June 30, 30, ____ _______ ___ will be Rs.  _____________. Audit fee for period subsequent to June 30, ________ will be subject to separate correspondence correspondence without amending this letter. 3.2 3.2 The abo above ve fee fee is exclus exclusive ive of of reimbu reimburse rseme ments nts of of out of of pocket pocket expe expense nses s at actu actual al which which woul would d includ include e travelling, conveyance, communication, printing and photocopying etc. At present, there is no tax or  government government levy on our billings, however, in future if any tax or government government levy is charged on our billing, the same will be payable by the Company in addition to our professional fee. This letter forms the entire agreement and understanding between us with respect to the subject matter  hereof. This letter supersedes all previous arrangements and understandings between the parties with respect to the subject of this letter, which shall cease to have any further force or effect. Any variation to the terms of this letter shall be made in writing and will not be effective unless signed by the proprietor of  Tariq Mir & Co or by a duly authorized representative. This agreement is made under, and shall be governed by, Pakistan law, and all disputes arising from or  under this agreement shall be subject to the exclusive jurisdiction of the courts in Pakistan. This letter will be effective for future periods unless it is terminated, terminated, amended or superseded. Please sign and return the attached copy to indicate that it is in accordance with your understanding of the audit arrangements. Yours faithfully, I confirm the above terms of audit for and on behalf of the Company. Authorised signatory: ___________________  Name: ___________________  Position: ___________________  Date: ___________________  3
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Ref

:

Date :

The Board of Directors
(Company Name)
(Address)

Gentlemen,

AUDIT FOR THE YEAR ENDING 30 JUNE _______

You have requested that we audit the balance sheet of the Company as of June 30, _____ and the
related profit and loss account, statements of cash flows and changes in equity for the period/year then
ending. We are pleased to confirm our acceptance and our understanding of this engagement by means
of this letter.

1. Audit

1.1 We will conduct our audit in accordance with Auditing Standards as applicable in Pakistan with the
objective of expressing an opinion whether the financial statements conform with approved accounting
standards as applicable in Pakistan, and, give the information required by the Companies Ordinance,
1984, in the manner so required and respectively give a true and fair view of the state of the Company’s
affairs as at June 30, ______ and of the profit, its cash flows and changes in equity for the period/year
then ended. Those Standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatements. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation.

1.2 Our report will be addressed to the Board of Directors of the Company. We cannot provide assurance
that an unqualified opinion will be rendered, since circumstances may arise in which it would be
necessary for us to modify our report or withdraw from the engagement. In such circumstances, our
findings or reasons for withdrawal will be communicated to the Board of Directors.

1.3 In view 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.

1.4 In addition to our report on the financial statements, we expect to provide you with a separate letter
concerning any material weaknesses in accounting and internal control systems, which come to our
notice. The extent to which we examine internal controls, and hence have the opportunity to observe
weaknesses, is impacted by our determination of the most efficient audit approach. We are not required
by auditing standards to make an examination of internal controls beyond that which we make in
determining the nature, extent and timing of our other audit procedures, and we have not been engaged
to report on the Company’s internal control structure.

1.5 The Company will make available to us all records, documentation, and information including minutes of
all Management and Board of Directors’ meetings we request in connection with our audit, that all
material information will be disclosed to us, and that we will have the full cooperation of the Company’s
personnel.

1.6 The responsibility for the preparation of financial statements including adequate disclosures is that of the
management of the Company. This includes the maintenance of adequate accounting records and
internal controls, the selection and application of accounting policies, and the safeguarding of the assets
of the Company. Management is also responsible for identifying and ensuring that the Company
complies with laws and regulations applicable to its activities. As part of our audit process, we will request
from management written confirmation concerning representations made to us in connection with the
audit.

1.7 In addition, ISA 240, “The Auditor’s Responsibility to Consider Fraud and Error in an Audit of Financial
Statements”, requires that we obtain specific written representations from management that:

(a) it acknowledges its responsibility for the implementation and operations of accounting and internal
control systems that are designed to prevent and detect fraud and error;

(b) it believes the effects of those uncorrected financial statement misstatements aggregated by us
during the audit are immaterial, both individually and in the aggregate, to the financial statements
taken as a whole;

(c) it has disclosed to us all significant facts relating to any frauds or suspected frauds known to
management that may have affected the entity; and

(d) it has disclosed to us the results of its assessment of the risk that the financial statements may be
materially misstated as a result of fraud.

These specific items will be included in our request for written confirmation concerning representations
made to us in connection with the audit.

2. Other terms and Conditions

2.1 If you require us to complete our work under this engagement contract or, any part of it, by a specific date
or time, you will inform us in writing of your requirement. Whilst we will make every effort to complete
such work by the date specified, it is imperative that meeting any such requirement will rely on you
providing reasonable notice of your requirement and the timely provision of such information as we may
need to complete the work concerned.

2.2 In connection with this engagement, you agree that the liability to the Company of this firm, its partners,
directors, employees, and agents (in contract or under statute or otherwise) for any loss or damage
suffered by the Company arising out of, or in connection with this engagement, however the loss or
damage that is caused, including our negligence but not our wilful default, shall be limited to the amount
of fee charged for the engagement.

2.3 Tariq Mir & Co. will not be responsible or liable if information material to our task is withheld or concealed
from us or wrongly represented to us.

2.4 We will treat as such all confidential proprietary information obtained from the Company and will not
disclose such information to others, except to those persons engaged in providing services to you, or use
such information except in connection with the performance of the services agreed to in this letter. This
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undertaking shall not apply to any of the information that we are required by law or by the requirements of
any regulators or by specific professional standards to disclose or that is in or hereafter enters the public
domain. Under the directive issued by the Institute of Chartered Accountants of Pakistan to audit firms,
our working paper files pertaining to the audit of the Company may be subject to Quality Control Review
(QCR) without any reference to the Company.

2.5 You will indemnify and hold harmless Tariq Mir & Co, its proprietor, agents, and employees from, and
against, any and all costs, expenses, losses, claims, demands, actions, suits, or proceedings paid,
incurred, or suffered or made or initiated against it by any third party arising out of, or in connection with,
this engagement regardless of whether the loss or damage is caused other than through our fraud or
wilful default.

3. Fee

3.1 Our fees are based on the time required by the individuals assigned to the engagement plus direct out of
pocket expenses. Individual hourly rates vary according to the degree of responsibility involved and the
experience and skill required. Our audit fees for the year ending June 30, _______ will be Rs.
_____________. Audit fee for period subsequent to June 30, ________ will be subject to separate
correspondence without amending this letter.

3.2 The above fee is exclusive of reimbursements of out of pocket expenses at actual which would include
travelling, conveyance, communication, printing and photocopying etc. At present, there is no tax or
government levy on our billings, however, in future if any tax or government levy is charged on our billing,
the same will be payable by the Company in addition to our professional fee.

This letter forms the entire agreement and understanding between us with respect to the subject matter
hereof. This letter supersedes all previous arrangements and understandings between the parties with
respect to the subject of this letter, which shall cease to have any further force or effect. Any variation to
the terms of this letter shall be made in writing and will not be effective unless signed by the proprietor of
Tariq Mir & Co or by a duly authorized representative.

This agreement is made under, and shall be governed by, Pakistan law, and all disputes arising from or
under this agreement shall be subject to the exclusive jurisdiction of the courts in Pakistan.

This letter will be effective for future periods unless it is terminated, amended or superseded. Please sign
and return the attached copy to indicate that it is in accordance with your understanding of the audit
arrangements.

Yours faithfully,

I confirm the above terms of audit for and on behalf of the Company.

Authorised signatory: ___________________

Name: ___________________

Position: ___________________

Date: ___________________

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