AUD Engagement Letter · Updated November 2026
What Does the Audit Engagement Letter Actually Establish?
The engagement letter tells both sides what the audit is, what it is not, and who is responsible for what.
Audit objective and scope
The letter identifies the nature of the engagement and applicable reporting framework.
Auditor responsibility
The auditor performs the engagement under applicable standards to obtain the required level of assurance.
Management responsibility
Management acknowledges responsibility for the financial statements, internal control, information provided, and access to personnel and records.
Inherent limitations
An audit provides reasonable rather than absolute assurance.
Other terms
Depending on the engagement, the letter can address timing, fees, specialists, and other administrative terms.
The takeaway
The engagement letter defines responsibilities before fieldwork begins.
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FAQ
Does management transfer financial statement responsibility to the auditor?
No.
Does an audit provide absolute assurance?
No.
Is an engagement letter useful only for first-year audits?
No.