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CS Professional · Compliance Management, Audit and Due Diligence · Audit Engagement

Before the audit of Narmada Cements Ltd begins, the auditor drafts an engagement letter. Which of the following is a matter that SA 210 says the letter may refer to?

An audit engagement letter may refer to the basis on which fees are computed and any billing arrangements. SA 210 lists this among additional matters, alongside scope elaboration, the expected written representations, the audit team composition and timing of draft financial statements.

  1. AThe personal investment portfolio of the audit partner
  2. BThe basis on which fees are computed and any billing arrangementsCorrect
  3. CThe company's forthcoming dividend rate decided by the board
  4. DThe marketing plan of the company for the next year

Explanation

SA 210 lists, among items an engagement letter may refer to, the basis on which fees are computed and any billing arrangements. The other options have no connection to the terms of an audit engagement.

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