AU-C 210 Terms of Engagement


Original Pronouncement Statement on Auditing Standards (SAS) 122.


This section states the requirements and provides application guidance on the auditor's responsibilities in agreeing upon terms of engagement with management and those charged with governance. It establishes preconditions for an audit, for which management is responsible. AU-C 220, Quality Control for an Engagement Conducted in Accordance with Generally Accepted Auditing Standards, addresses those aspects of engagement acceptance that the auditor can control. AU-C 580, Written Representations, discusses management's responsibilities. (AU-C 210.01)


Source: AU-C 210.04

Preconditions for an audit. The use by management of an acceptable financial reporting framework in the preparation and fair presentation of the financial statements and the agreement of management and, when appropriate, those charged with governance, to the premise on which an audit is conducted.

Recurring audit. An audit engagement for an existing audit client for whom the auditor performed the preceding audit.


AU-C Section 210.03 states that:

… the objective of the auditor is to accept an audit engagement for a new or existing audit client only when the basis upon which it is to be performed has been agreed upon through

  1. establishing whether the preconditions for an audit are present and
  2. confirming that a common understanding of ...

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