When it comes to auditing, the importance of an engagement letter cannot be overstated. These letters act as a contract between the principal and the auditor, setting out key terms and conditions of the audit engagement. In today’s fast-paced business world, where key decisions are made based on accurate financial information, having an accurate and concise audit engagement letter is crucial.
At KPMG, we understand the importance of providing businesses with an engagement letter that is both detailed and comprehensive. Our audit engagement letter is designed to help clients understand the scope of our services and what they can expect from us during the audit process. These letters set out the objectives of the audit, the responsibilities of both parties, and the key terms and conditions that govern the engagement.
If you are looking for examples of an audit engagement letter, you can find them readily available online. At KPMG, we make it easy for our clients to get the information they need to ensure that their engagement letter provides them with adequate protection. We provide our clients with examples of our engagement letters, which they can edit as needed to meet their specific needs.
So if you are in need of an audit engagement letter, look no further than KPMG. Our commitment to providing our clients with the highest level of service and support ensures that our engagement letters are among the best in the business. With our help, you can rest easy knowing that your audit engagement letter provides you with the protection and assurance you need to make critical business decisions with confidence.
The Best Structure for an Audit Engagement Letter of KPMG
As an internationally acclaimed public accounting firm, KPMG is dedicated to delivering quality and consistent audit services to its clients. This commitment is clearly reflected in their audit engagement letter which serves as the foundation of their working relationship with clients. It outlines the expectations, responsibilities, and limitations of both parties, and sets forth agreed-upon terms and conditions of the audit engagement. A well-written engagement letter lays the groundwork for open communication, trust, and understanding between KPMG and their client.
The best structure for an audit engagement letter of KPMG can be divided into three main parts: the introduction, the scope of work, and the terms and conditions. In the introduction, KPMG addresses the client and briefly explains the purpose and objectives of the audit. This section also includes an acknowledgement of management’s responsibility for the financial statements and a statement of KPMG’s independence and ethical behavior.
The scope of work is the heart of the audit engagement letter. This section outlines the specific services that KPMG will perform in order to meet the objectives of the engagement. It details the audit methodology, procedures, and timeline to ensure that there is a common understanding between KPMG and the client. The scope of work should also identify any limitations of the audit, such as materiality, sampling, and fraud risk, and specify how any issues will be addressed.
The terms and conditions section of the audit engagement letter is the final part of the structure and includes important details about the responsibilities of both KPMG and the client. This section typically covers fees and billing arrangements, confidentiality policy, ownership of documents, termination, and liability limitations. KPMG also includes a statement about the purpose of the engagement letter, which is to confirm the understanding of the scope of work and terms and conditions of the audit engagement.
In conclusion, the best structure for an audit engagement letter of KPMG provides a clear and concise overview of the audit process and sets the expectations for the client. A well-structured engagement letter enhances the efficiency and effectiveness of the audit and mitigates any misunderstandings or miscommunications that could arise during the process. By following this structure, both KPMG and their clients can be confident that their audit engagement is established on a solid foundation.
KPMG Audit Engagement Letter Samples
Audit Engagement Letter for Statutory Financial Statements
Greetings,
We are pleased to confirm our acceptance of the engagement to audit the statutory financial statements of ABC Inc. for the financial year ended 31 December 20XX.
The first paragraph of this letter confirms the agreement between KPMG and the client for the audit of statutory financial statements. We will perform the audit in accordance with generally accepted auditing standards, applicable laws and regulations, and the International Standards on Auditing. Our audit team will review the internal controls of the company and assess the risk of material misstatement in the financial statements. We also plan to obtain sufficient appropriate audit evidence to support our opinion on the financial statements and to report any material weaknesses in internal control that we identify.
We appreciate the opportunity to be of service to ABC Inc. If you have any questions, please do not hesitate to contact us.
Yours sincerely,
KPMG
Audit Engagement Letter for Special Purpose Audit
Greetings,
We are pleased to confirm our acceptance of the engagement to perform a special purpose audit of XYZ Company for the financial year ended 31 December 20XX.
This letter confirms the agreement between KPMG and the client for the audit of XYZ Company for the purpose of providing an opinion on the financial information as mentioned in the engagement letter. The scope of the audit will be limited to that required for such a purpose and will be conducted in accordance with the International Standards on Auditing. The opinion that we provide will be based on the financial information provided by the Company and the procedures we undertake.
We are confident that our expertise and experience will enable us to deliver accurate and reliable conclusions on the financial information. If you have any questions regarding the engagement, please do not hesitate to contact us.
Yours sincerely,
The KPMG Team
Audit Engagement Letter for Compliance Audit
Greetings,
We are pleased to confirm our acceptance of the engagement to perform a compliance audit of the environmental report of DEF Company for the financial year ended 31 December 20XX.
The scope of the engagement is to provide an opinion as to whether the environmental report prepared by DEF Company is in compliance with the relevant environmental regulations. We will perform the audit in accordance with the International Standards on Auditing and submit the findings as required by the engagement agreement.
We are looking forward to working with you to provide an independent and objective report for the stakeholders of DEF Company. Please do not hesitate to contact us if you have any questions.
Yours sincerely,
KPMG
Audit Engagement Letter for Forensic Audit
Greetings,
We are pleased to confirm our acceptance of the engagement to perform a forensic audit of the financial information of HIJ Company for the financial year ended 31 December 20XX.
This engagement is to investigate allegations of financial irregularities and to provide an opinion on the validity of the financial information presented. We will perform the audit in accordance with the International Standards on Auditing and the relevant legal and ethical standards. Our team is qualified and experienced in forensic accounting to effectively investigate and provide an objective report.
We appreciate the opportunity to be of service to HIJ Company and provide assurance on the validity of the financial information. Please do not hesitate to contact us if you have any questions.
Yours sincerely,
KPMG Team
Audit Engagement Letter for Internal Audit
Greetings,
We are pleased to confirm our acceptance of the engagement to perform internal audits of the financial and operational controls of LMN Company for the financial year ending 31 December 20XX.
This engagement is to assist the company in evaluating the effectiveness of their internal controls. We will perform the audit in accordance with the International Standards on Auditing as well as the company’s policies and procedures. Our team is qualified and experienced in internal audits to effectively review and provide recommendations on the controls and procedures implemented by LMN Company.
We appreciate the opportunity to work with LMN Company and provide recommendations for improvement. Please do not hesitate to contact us if you have any questions regarding the engagement.
Yours sincerely,
KPMG Team
Audit Engagement Letter for Non-Profit Organization
Greetings,
We are pleased to confirm our acceptance of the engagement to perform an audit of the financial statements of the non-profit organization PQR for the financial year ending 31 December 20XX.
The audit will be performed in accordance with the International Standards on Auditing and relevant laws and regulations. Our team has experience and expertise in the audit of non-profit organizations and will provide assurance on the financial statements prepared by PQR.
Thank you for the opportunity to be of service to PQR. Please do not hesitate to contact us if you have any questions.
Yours sincerely,
KPMG
Audit Engagement Letter for Joint Venture
Greetings,
We are pleased to confirm our acceptance of the engagement to perform an audit of the financial statements of the joint venture company RST for the financial year ended 31 December 20XX.
The audit will be performed in accordance with the International Standards on Auditing and relevant laws and regulations. Our team has experience and expertise in the audit of joint venture companies and will provide assurance on the financial statements prepared by RST.
We look forward to working with RST and providing an objective and independent view on the financial statements. Please do not hesitate to contact us if you have any questions regarding the engagement.
Yours sincerely,
KPMG Team
Tips for Writing and Approving an Audit Engagement Letter with KPMG
When it comes to auditing, an engagement letter is a formal document that outlines the terms and conditions of an engagement between the auditor and the client. This letter serves as a legal contract that can help prevent future misunderstandings or disputes between the parties involved. In this article, we will dive into tips for writing and approving an audit engagement letter with KPMG.
1. Determine the scope and objective of the engagement: Before writing the engagement letter, it is essential to define the scope and objective of the audit engagement. The scope should include the audit period, the nature of the audit, the financial statements the auditor will review, the level of assurance being provided, and the responsibility of each party. It is the auditor’s responsibility to determine the scope, but it is the client’s responsibility to agree with the scope.
2. Be clear and concise in your language: The language used in the engagement letter should be easy to understand for both parties. Avoid using technical terms or jargon that the client might not be familiar with. The terms and conditions of the engagement should be stated clearly and concisely to prevent misinterpretation and provide clarity for both parties.
3. Discuss expectations and responsibilities: The audit engagement letter should include the expectations and responsibilities of both the auditor and the client. The client’s responsibilities could include providing the auditor with access to the necessary documents, cooperating with the auditor’s requests, and providing accurate information. On the other hand, the auditor’s obligations should be clearly outlined, including the audit standard to be followed, the deliverables to be provided by the auditor, among others.
4. Establish the fee and payment terms: To prevent misunderstandings and disputes, it is essential to set out the fee and payment terms in the engagement letter. The letter should include the total audit fee, invoicing dates, payment terms, payment methods, and any other relevant billing information. It is also advisable to include the responsibility of each party concerning the payment of fees.
5. Approval and Execution of the Engagement Letter: Finally, after writing the engagement letter, both parties must approve and sign the engagement letter. This formal action serves as the go-ahead for the auditor to commence work on the engagement. The letter will set the right expectations and prevent any disputes between the parties that may arise.
In conclusion, the engagement letter is an essential document that outlines the terms and conditions of an audit engagement and sets the tone for the relationship between the auditor and the client. By following the tips mentioned above, you can ensure that your audit engagement letter with KPMG sets the right expectations and serves as a roadmap for a successful engagement.
Audit Engagement Letter – FAQs
What is an audit engagement letter?
An audit engagement letter is a formal document that outlines the terms and scope of services to be provided by an auditor to its client.
Why is an audit engagement letter important?
An audit engagement letter is important because it sets out the expectations and responsibilities of both the auditor and the client, ensures mutual understanding of the objectives and limitations of the audit, and establishes the existing relationship between the two parties.
What are the key elements of an audit engagement letter?
The key elements of an audit engagement letter include the purpose and scope of the audit, the responsibilities of both the auditor and the client, access to information and records, communication, confidentiality, and the fee arrangement.
Is an audit engagement letter a legal agreement between the auditor and the client?
Yes, an audit engagement letter is a legal agreement that governs the relationship between the auditor and the client during the audit engagement period.
Can the terms and conditions of the audit engagement letter be changed after it has been signed?
The terms and conditions of the audit engagement letter can be changed if both parties mutually agree to revise it after analyzing the significant changes. The revision of audit engagement letter necessitates a new approval and signature from both parties
Can an auditor accept an engagement without an audit engagement letter?
No, it is not appropriate for an auditor to accept an engagement without an audit engagement letter as it serves as leggal evidence to clarify the terms, conditions, and responsibilities of both parties.
Does KPMG provide sample audit engagement letters?
Yes, KPMG provides sample audit engagement letters, templates, and other relevant resources which auditor or the client can tailor to meet their specific reporting circumstances to ensure the engagement letter complies with the requirements of professional standards and regulations.
That’s a Wrap!
And with that, we’ve come to the end of our article on the audit engagement letter of KPMG. We hope you found the information provided helpful and informative. If you have any further questions or comments, feel free to leave them below. Thanks for reading, and don’t forget to check back with us soon for more engaging content!