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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › Engagement letter
Dear Sir,
Good day. I attempted this MCQ question as follows.
Once NAB Co has accepted appointment as Mickey’s auditor, it must draw up an engagement letter. Which of the following must be included in the audit engagement letter?
A) Arrangements concerning the use of experts such as inventory counters
B) Obligation to make audit working papers available to other parties
C) Expected form and content of any reports
D) Basis on which fees are computed
I chose D but correct answer was C. Why C when D is also included in the engagement letter? Please explain what does C mean.
Thank you.
Warmest regards,
Eric Lam
The key word in the question is ‘must’. The basis of fees will usually be included but does notmjave to be.
The audit will result in an audit report and the engagement letter is the contract. The letter must set out the form and content of the report eg a positive assurance (reasonable assurance) about the FS.
Dear Sir,
Thank you for the clear explanation.
Warmest regards,
Eric Lam