The engagement letter:
A) is useful only if it is an audit engagement, but has no effect for review or compilation services.
B) can affect legal responsibilities to the client.
C) can be used to alter the auditor's responsibilities under Australian auditing standards.
D) affects the audit firm's responsibility to external users of audited financial statements.

Question

Quizplus · Accepted Answer

The engagement letter outlines the scope of the auditor's responsibilities and the terms of the engagement, affecting legal responsibilities to the client. It does not alter the auditor's responsibilities under auditing standards, nor is it only useful for audit engagements. It primarily defines the relationship between the auditor and the client, not external users.

The Engagement Letter