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

Gupta & Co. audits Narmada Power Ltd, where law fully prescribes the objective, scope and responsibilities of the audit. The partner wants to keep the engagement letter short. What is the minimum SA 210 permits in the letter in these circumstances?

The letter may include only a reference that the relevant law or regulation applies and that management acknowledges and understands its responsibilities. The auditor may nevertheless include all the usual matters for management's information, but is not required to when law sufficiently prescribes them.

  1. ANo engagement letter is needed at all
  2. BOnly the fee and billing arrangements
  3. COnly a reference that relevant law or regulation applies and that management acknowledges and understands its responsibilitiesCorrect
  4. DThe full paragraph 10 matters, with no possibility of reduction

Explanation

Where law sufficiently prescribes the matters in paragraph 10, paragraph 11 permits the letter to include only a reference to the fact that the relevant law or regulation applies and that management acknowledges and understands its responsibilities. The auditor may still choose to include all paragraph 10 matters for management's information, but is not required to.

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