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CMA Intermediate · Corporate Accounting and Auditing · Audit Engagement, Audit Program, Audit Documentation and Audit Evidence

Which of the following is mentioned in SA 210 as a point that may be made in an audit engagement letter, when relevant?

SA 210 says that, when relevant, the engagement letter may cover arrangements to be made with the predecessor auditor in an initial audit. The other choices contradict the standard, which stresses inherent limitations and management's responsibilities.

  1. AA guarantee that all material misstatements will be detected
  2. BArrangements to be made with the predecessor auditor in the case of an initial auditCorrect
  3. CA promise that the auditor will not communicate key audit matters
  4. DA waiver of management's responsibility for the financial statements

Explanation

SA 210 lists arrangements with the predecessor auditor in an initial audit among the points that may be included when relevant. The letter instead mentions the unavoidable risk that some material misstatements may not be detected, so a guarantee is wrong. Management's responsibilities are acknowledged, not waived.

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