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

Halfway through the audit of Ganga Polymers Ltd, management asks the auditor to change the engagement to one conveying a lower level of assurance. The auditor concludes there is reasonable justification and the change is accepted. Which course is consistent with SA 210?

The auditor and management must agree on and record the new terms in an engagement letter or other suitable form of written agreement. SA 210 requires this after the auditor first determines there is reasonable justification for moving to a lower level of assurance.

  1. AOnly an oral understanding is needed since the engagement is already under way
  2. BThe new terms are to be agreed and recorded by the auditor and management in an engagement letter or other suitable form of written agreementCorrect
  3. CThe original engagement letter continues unchanged without any further record
  4. DThe auditor alone records the new terms and need not obtain management's agreement

Explanation

SA 210 requires the auditor to determine whether there is reasonable justification for the request. If the terms are changed, the auditor and management must agree on and record the new terms in an engagement letter or other suitable form of written agreement. Oral or unilateral arrangements do not satisfy this.

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