CMA Final · Cost and Management Audit · Cost Audit Programme
As per SCA 105, on recurring cost audits the cost auditor shall:
On recurring cost audits, the cost auditor must assess whether circumstances require revising the engagement terms and whether the entity should be reminded of the existing terms. Neither automatic annual new terms nor taking no step is what SCA 105 requires.
- AAlways issue a fresh engagement letter with entirely new terms every year
- BAssess whether circumstances require the terms of the engagement to be revised and whether the entity needs a reminder of the existing termsCorrect
- CPresume that the earlier terms continue and take no further step
- DSeek the approval of the Quality Review Board before continuing the engagement
Explanation
SCA 105 para 5.8 requires the cost auditor on recurring audits to assess whether circumstances require revising the terms and whether to remind the entity of the existing terms. It neither mandates a new letter every year nor allows no assessment.
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