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How to write audit engagement letter

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The CPA firm of Test & Check has been appointed auditors for the XYZ Corporation by the company's audit committee. The engagement is limited to making an audit of the company's financial statements. The audit fee is to be at the firm's regular per diem rates plus travel costs. To confirm the arrangements, Test & Check sends an engagement letter (see attachments).

List the deficiencies in the engagement letter. For each deficiency, indicate the proper wording.

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Solution Preview

1. Responsibility of the XYZ Corporation is omitted.

Proper wording:
Disclosure of financial statements and other related documents shall be ...

Solution Summary

This solution identifies basic flaw in writing audit engagement letter. It identifies line by line errors in the letter and provides proper wordings and suggestions.