Example of an Engagement Letter for an Agreed-upon
The following letter is for use as a guide in conjunction with paragraph 12 of this Standard on Related Services and is not intended to be a standard letter. The engagement letter will need to be varied according to individual requirements and circumstances.
To the Board of Directors (or other appropriate representatives of the client who engaged the auditor). This is in reference to your letter dated ________, appointing us to perform agreed-upon procedures in respect of _______________ (identify the items, e.g., sales, profit of a segment, accounts receivables, etc., of the entity). This letter is to confirm our understanding of the terms and objectives of our engagement and the nature and limitations of the services that we will provide. Our engagement will be conducted in accordance with the Standard on Related
Services (SRS) 4400, “Engagements to Perform Agreed-upon Procedures
regarding Financial Information”, issued by the Institute of Chartered Accountants of India and we will indicate so in our report. We have agreed to perform the following procedures and report to you the factual findings resulting from our work: (Describe the nature, timing and extent of the procedures to be performed, including specific reference, where applicable, to the identity of documents and records to be read, individuals to be contacted and parties from whom confirmations will be obtained.) The procedures that we will perform are solely to assist you in ______________________ (state purpose). Our report is not to be used for any other purpose and is solely for your information, and/ or for use by _________________ (in case the terms of reference so require). The procedures that we will perform will not constitute an audit or a review made in accordance with the generally accepted auditing standards in India and, consequently, no assurance will be expressed. We look forward to your full cooperation and trust that you will make available to us whatever records, documentation and other information requested in connection with our engagement. Our fees will be billed as work progresses. Please sign and return the attached copy of this letter to indicate that it is in accordance with your understanding of the terms of the engagement including the specific procedures, which we have agreed will be performed.
Acknowledged on behalf of ABC Company by
3 Partner or proprietor, as the case may be.
Example of a Report of Factual Findings in Connection with Accounts
Report of Factual Findings in Connection With
Agreed-upon Procedures Assignment Related to Accounts Receivable
To (those who engaged the auditor)
We have performed the procedures agreed with you and enumerated below with respect to the accounts receivable of ABC Company as at _______(date), set forth in the accompanying schedules (not shown in this example). Our engagement was undertaken in accordance with the Standard on Related
Services (SRS) 4400, “Engagements to Perform Agreed-upon Procedures
regarding Financial Information”, issued by the Institute of Chartered Accountants of India. The procedures were performed solely to assist you in evaluating the validity of the accounts receivable and are summarized as follows:
1. We obtained and checked the addition of the trial balance of accounts receivable as at __________ (date), prepared by ABC Company, and we compared the total to the balance in the related general ledger account.
2. We compared the attached list (not shown in this example) of major customers and the amounts outstanding at ____________ (date) to the related names and amounts in the trial balance.
3. We obtained customers’ statements or confirmations from customers to confirm balances outstanding at ________________ (date).
4. We compared such statements or confirmations to the amounts referred to in 2 above. For amounts which did not agree, we obtained reconciliations from ABC Company. For reconciliations obtained, we identified and listed outstanding invoices, debit notes and outstanding cheques, each of which was greater than Rs. XXX. We located and examined such invoices and debit notes subsequently raised and cheques subsequently received and we ascertained that they have been rightly listed as outstanding on the reconciliations. We report our findings below:
