Engagement letter
- Term
- Engagement letter
- Exam
- CISA
- Definition
A document agreeing the objectives, scope, timing and responsibilities for a specific audit engagement.
- Explained
An engagement letter, or terms of reference, applies the charter to one specific audit. It records objectives, scope, timing, deliverables and responsibilities agreed with the auditee, which prevents later disputes about what the audit covered. External assurance engagements almost always use one; internal audit uses equivalent planning memos.
- In practice
Before auditing the ERP system, audit and the CFO agree the scope, timing and reporting lines in an engagement letter.
- Often confused with
- Audit charter
- Exam angle
Don't confuse it with the charter, which covers the whole function.
- Related