When an auditor signs an engagement letter
A)the auditor may commence the audit
B)the client has an obligation to pay the audit fee
C)the auditor has a contract to perform the audit
D)the client is attesting to the accuracy of the financial statements

Question

Quizplus · Accepted Answer

When an auditor signs an engagement letter, it means that the auditor has entered into a contract to perform the audit services. This contract outlines the scope of the audit, responsibilities of the auditor and client, and the audit fee, among other things. The auditor cannot commence the audit until the engagement letter has been signed by both parties. While the client does have an obligation to pay the audit fee, this is not the primary purpose of the engagement letter. The client does not attest to the accuracy of the financial statements by signing the engagement letter.

When an Auditor Signs an Engagement Letter