How to Write Letter

Audit Engagement Letter

When a company seeks a CPA (Certified Public Accountant) service for audit purpose, an agreement is made between them through an audit engagement letter that states the type of services rendered and not rendered by the CPA along with the chargeable fees and payment acceptance terms. This letter is written by the CPA to the engaging company with an intention to eliminate any misunderstanding that may crop between two of them thereby reducing chances of filing suit against each other.


The audit engagement letter starts with a brief introduction about the firm and with a thank you note to the company for choosing the firm's services. It further states the date the firm will start auditing and the financial year for which auditing has to be done. It then speaks about the services related to the audit and any assistance required from the company in auditing their financial documents. Later, the chargeable fees and the payment terms are included in the letter.

Audit Engagement Letter

ABC Associates Inc.
235 Park Street
Newark, CA 95402
(850) XXX-4520

30 March, 2011

The Board of Directors
XYZ Company Limited
Newark, CA 95402

Dear Sir,

We appreciate and thank you for your decision in appointing us an auditor for XYZ Company Ltd. To derive the maximum benefits to both of us from our agreement, we are putting forth our roles and responsibilities along with the terms of engagement.

The main purpose of this agreement will be to audit the company's balance sheet for the year ended (2010). We need all the financial reports from your company to review. The financial report includes all the details of accounts receivables, accounts payable, income and expense statements, balance sheets, etc. The responsibility to furnish this information will rest on you (the company), and we hope they are all maintained as per the GAAP (Generally Accepted Accounting Principles) standard. Our responsibility will be to derive a concrete conclusion based on the report submitted to us and express our opinion for the same.

Further to make our role clear, let us tell you what audit is all about. It is a procedure in which the financial statements are analyzed. The company's accounting principles in maintaining and presenting the financial information is also assessed through an audit. We follow the process of confirming all the accounts receivable and payable through a third-party. We also need your lawyer's assistance to find out about any litigation or claims made on your property by any outside entities.

During the audit process, we need your approval in accessing the company's records and documents along with the internet and printer facility to our visiting staff. We may also need to use your telephone, fax and other mode of communication, which will strictly be for the audit purpose.

In agreeing our service for auditing, you can expect a concrete and reliable report from us, which will be based on our careful examining of all the transactions done by your company during the said financial year. We will let you know any glitch we find in your internal process for maintaining accounts.

Our fees for the service will be $XXXX.00 exclusive of travel and any other expenses made by us in during the audit.

If you agree with the content of this letter, please confirm your acceptance by signing at the space provided below. You are free to contact us if you need to clear any of your doubts.

Yours faithfully
ABC Associates Inc
Accepted by:
Signature and name:

This sample letter is just a guideline to help you while writing the audit engagement letter. It is advised to get information about the rules followed by your state for this type of agreement. Before sending it to your client, please get it read by your lawyer to avoid any further complications.

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