Psa 210: agreeing to the terms of the audit engagement

Scope of the psa:

1. Establish preconditions for the audit

Effective date:
2. December 15, 2009

Objective:
3. Accept or continue engagement:
a. Preconditions are met
b. common understanding from the auditor and the management

definitions:
4. preconditions of an audit – use of the firm by a proper financial framework

requirements:
Preconditions for an audit
a. determine whether financial reporting framework of the entity is okay
b. obtain agreement of the management that acknowledges their responsibility for:
a. financial reports
b. internal control
c. provide auditor with:
a. unrestricted access to personnel
b. additional information
c. Access to information

Limitation of the scope before an audit engagement acceptance :

7. if the management imposes a limitation and auditor deems the limitation to be not okay, auditor is
not compelled to accept the engagement as an assurance engagement.

Other factors affecting engagement acceptance:

8. if the preconditions are not met, discuss it with the management. Do not accept if:
 If the auditor deems that the financial reporting framework used by the management is not
acceptable
  If the agreement to access to all information is not met

Agreement on audit engagement teams:

9. the auditor shall agree the terms of the engagement with the management
10.

Laman ng engagement letter: ORRIR

1. Objective of the engagement
2. Responsibility of auditor
3. Responsibility of management
4. Identification of financial reporting framework
5. Reference to expected form and contents of the report

Additional considerations in engagement acceptance.

1. Financial reporting standards supplemented by law
2. Financial reporting standards prescribed by law – other matters affecting acceptance
3. Auditor’s report prescribed by law or regulation

Factors relevant to the auditor’s determination of the acceptability of the framework:

1. Nature of the entity
2. Purpose of the FS
3. Nature of FS
4. Law prescribes the applicable FRF

Financial reporting standards accepted:

1. Ifrs
2. Pfrs
3. Ipsas
4. Accounting principles promulgated by authorized organizations
Revision of engagement letter:
1. Change:
a. Senior management
b. Ownership
c. Nature and size of business
d. Financial reporting framework
e. Reporting requirements
f. Legal and regulatory requirements
2. Misunderstanding
3. Revise and special terms