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

For a statutory audit of Bharat Rail Components Ltd, the law itself fully prescribes the objective and scope of the audit and the responsibilities of management and the auditor. The auditor, CA Menon, is considering what to put in the engagement letter. Which view is consistent with SA 210?

When law sufficiently prescribes the required matters, the auditor may restrict the letter to noting that the relevant law applies and that management acknowledges and understands its responsibilities. Including the full set of matters for management's information is still allowed.

  1. ANo engagement letter of any kind may be issued since law covers everything
  2. BThe letter must still repeat every matter in the required list word for word
  3. CThe letter may refer only to the fact that the relevant law applies and that management acknowledges and understands its responsibilities, though including the required matters for management's information is still permittedCorrect
  4. DThe letter may omit the management acknowledgement but must state the fees

Explanation

Where law sufficiently establishes the required matters, the letter may include only a reference to the applicable law and management's acknowledgement and understanding of its responsibilities. The auditor may nevertheless consider it appropriate to include the full matters for management's information. Hence the third option alone fits.

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