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ISA 210 (REDRAFTED) AGREEING THE TERMS OF AUDIT ENGAGEMENTS

ISA 210 deals with the auditor’s responsibilities in agreeing the terms of the audit engagement with management and, where appropriate, those charged with governance. In agreeing these terms, the auditor will ensure that certain preconditions for an audit are present [ISA210.1]. Management1 and, where appropriate, those charged with governance, are responsible for those preconditions. It follows that the objective of this standard is to enable the auditor to:

  • establish whether the preconditions for an audit are present; [ISA210.3(a)] and
  • confirm that there is a common understanding between the auditor and management of the terms of the audit engagement. [ISA210.3(b)]

It is only if these criteria can be agreed that the auditor should accept or continue an audit engagement. It is extremely important, therefore, that a clear understanding of the rules and ISA content is obtained to avoid any doubt as to whether to accept or continue an audit engagement.

For the purposes of this ISA, preconditions are the use of an acceptable financial reporting framework by management in the preparation of the entity’s financial statements and the agreement by management and, where applicable, those charged with governance on the premise of the audit to be conducted. [ISA210.4]

In determining whether the preconditions are met, the auditor must conclude whether the financial reporting framework used by management in the preparation of ...

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