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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Professional appointments

A law requires the audit of Delta Transport Ltd and prescribes the auditor's responsibilities and the form of the audit report in detail. Seaton & Co is appointed. The partner proposes not to issue an engagement letter, because the law already sets out the terms. Which is the most appropriate view under ISA 210?

The auditor may still issue an engagement letter covering the ISA 210 matters. Where law prescribes responsibilities in sufficient detail, those do not need to be repeated beyond noting the law applies, but a letter remains useful for other terms. The law does not simply make the letter unnecessary.

  1. ACorrect, since law makes an engagement letter unnecessary in all cases
  2. BIncorrect, because the auditor must always replace the law's terms with those in the letter
  3. CCorrect only if the audit fee is also set by the law
  4. DThe auditor may still choose to issue a letter that sets out the matters in ISA 210, though the law may reduce the need to repeat the matters already prescribedCorrect

Explanation

ISA 210 recognises that law may prescribe responsibilities in sufficient detail, so the auditor need not include them in the letter beyond noting that the law applies and that management acknowledges its responsibilities. The auditor may still choose to give a letter covering other ISA 210 matters. The law does not replace the letter altogether, and the letter does not override the law.

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