Annual Audit Manual
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3044 Recurring audits
Apr-2018
In This Section
Overview
This topic explains:
- Revision of the terms of the audit engagement and reminding the entity of existing terms on recurring audits
CAS Requirement
On recurring audits, the auditor shall assess whether circumstances require the terms of the audit engagement to be revised and whether there is a need to remind the entity of the existing terms of the audit engagement (CAS 210.13).
CAS Guidance
The auditor may decide not to send a new audit engagement letter or other written agreement each period. However, the following factors may make it appropriate to revise the terms of the audit engagement or to remind the entity of existing terms (CAS 210.A30):
- Any indication that the entity misunderstands the objective and scope of the audit.
- Any revised or special terms of the audit engagement.
- A recent change of senior management.
- A significant change in ownership.
- A significant change in nature or size of the entity’s business.
- A change in legal or regulatory requirements.
- A change in the financial reporting framework adopted in the preparation of the financial statements.
- A change in other reporting requirements.
OAG Guidance
When circumstances require the terms of the engagement to be revised or when there is a need to remind the entity of the existing terms of engagement, issue an updated engagement letter. If the terms of the engagement are not reconfirmed in an engagement letter, document the basis for this decision.
Consider if the following additional factors may make it appropriate to change the terms of the audit engagement:
- there is a significant change in the scope of the engagement,
- a change in senior management and the client’s governing body,
- a change in the professional requirements that has a significant effect on the engagement.