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

Bharat Power Board, a State government entity, has an auditor whose appointment and responsibilities are mandated in detail by the governing law. The auditor, CA Imran Shaikh, wonders whether he may still issue a fuller engagement letter than the law strictly requires. What does SA 210 guidance indicate?

He may issue a fuller letter. SA 210 guidance says that where law or regulation prescribes the audit terms in sufficient detail, the auditor may still consider there are benefits in issuing a fuller engagement letter than the minimum permitted, so the law does not prohibit it.

  1. AHe cannot, because law prescribing the terms bars any engagement letter
  2. BHe must, because an engagement letter is mandatory in every government audit regardless of law
  3. CHe may, since even where law prescribes the terms in sufficient detail the auditor may consider there are benefits in issuing a fuller letterCorrect
  4. DHe may do so only with the prior approval of the State government

Explanation

SA 210 guidance notes that for government entities law often mandates the appointment and sets out responsibilities and powers. Where law prescribes the terms in sufficient detail, the auditor may nonetheless see benefits in issuing a fuller engagement letter. Hence neither a bar nor a compulsion applies.

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