What is the best description of the engagement letter?
A)a letter at the end of the audit engagement reviewing any concerns the auditors wish management to be aware of
B)a written agreement between the public accounting firm and the client as to the terms of the engagement for the conduct of the audit
C)a letter from a successor auditor to a predecessor auditor asking to review the working papers for the previous year
D)a letter soliciting a potential client

Question

Quizplus · Accepted Answer

The engagement letter is a written agreement between the CPA firm and the client that outlines the terms of the engagement for conducting the audit. It establishes the scope and objectives of the audit, the responsibilities of the auditor and the client, the timeframe for completion, and the fees to be charged.

Answer: D
 Choice D is not an accurate description of an engagement letter. A letter soliciting a potential client is a marketing communication aimed at attracting new business. It is not a formal agreement between the CPA firm and the client for the conduct of an audit.

What Is the Best Description of the Engagement Letter