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

Halcyon Foods Pvt Ltd agreed terms with its auditor in April. In September, management asks the auditor to change the scope so that a specific unit is covered differently, and the auditor accepts the change. What does SA 210 require regarding the revised terms?

The auditor and management must agree on and record the new terms in an engagement letter or another suitable form of written agreement. Oral understandings or silently relying on the original letter do not satisfy SA 210 when terms have changed.

  1. AThe original letter continues to apply and no record of the change is needed
  2. BThe auditor and management shall agree on and record the new terms in an engagement letter or other suitable form of written agreementCorrect
  3. COnly an oral agreement with the audit committee chair is needed
  4. DA fresh engagement letter is required only if fees change

Explanation

Where the terms of the engagement are changed, the auditor and management must agree on and record the new terms in an engagement letter or other suitable written agreement. The change in fees alone is not the trigger, and oral agreement is not sufficient.

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