Audit Engagement Letter Template
Dear {{addressee_name}},
You have requested that we audit the financial statements of {{client_name}}, which comprise the Balance Sheet as at {{period_end}}, and the Statement of Profit and Loss, the Statement of Changes in Equity (where applicable) and the Statement of Cash Flows for the year then ended, and a summary of significant accounting policies and other explanatory information. We are pleased to confirm our acceptance and our understanding of this audit engagement by means of this letter.
The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Standards on Auditing (SAs) issued by the Institute of Chartered Accountants of India (ICAI) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The Responsibilities of the Auditor
We will conduct our audit in accordance with the Standards on Auditing (SAs) issued by the ICAI and the relevant provisions of the Companies Act, 2013 (the "Act"). Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. However, we will communicate to you in writing concerning any significant deficiencies in internal control relevant to the audit of the financial statements that we have identified during the audit.
An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
Because of the inherent limitations of an audit, together with the inherent limitations of internal control, there is an unavoidable risk that some material misstatements may not be detected, even though the audit is properly planned and performed in accordance with the Standards on Auditing.
The Responsibilities of Management and Identification of the Applicable Financial Reporting Framework
Our audit will be conducted on the basis that management acknowledge and understand that they have responsibility:
- For the preparation and presentation of the financial statements that give a true and fair view in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Companies Act, 2013 (or the Indian Accounting Standards (Ind AS) where applicable);
- For such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error;
- For the matters specified in Section 134(5) of the Companies Act, 2013 with respect to the preparation of the financial statements;
- To provide us with access to all information of which management is aware that is relevant to the preparation of the financial statements, such as records, documentation and other matters;
- To provide us with additional information that we may request from management for the purpose of the audit;
- To provide us with unrestricted access to persons within the entity from whom we determine it necessary to obtain audit evidence; and
- To provide us with written representations confirming the matters communicated by management, including those required under SA 580 — Written Representations — at or near the date of our auditor’s report.
As part of our audit process, we will request from management written confirmation concerning representations made to us in connection with the audit.
We look forward to full cooperation from your staff during our audit.
Reporting
The form and content of our report may need to be amended in the light of our audit findings. We will issue our report under Section 143 of the Companies Act, 2013, which includes our opinion on whether the financial statements give a true and fair view, together with the matters required to be reported under the Companies (Auditor’s Report) Order, 2020 (CARO 2020), where applicable.
Other Relevant Information
- Our fees, which will be billed as work progresses, are based on the time required by the individuals assigned to the engagement plus out-of-pocket expenses. Individual hourly rates vary according to the degree of responsibility involved and the experience and skill required.
- The working papers prepared in conjunction with our audit are the property of our firm, constitute confidential information, and will be retained by us in accordance with our firm’s policies and applicable regulatory requirements.
- We may, from time to time and depending on the circumstances, use third-party service providers in serving your account. We will not, however, disclose any confidential information to such service providers without obtaining your prior written consent.
- This letter will be effective for future years unless it is terminated, amended or superseded.
Please sign and return the attached copy of this letter to indicate your acknowledgement of, and agreement with, the arrangements for our audit of the financial statements, including our respective responsibilities.
Yours faithfully,
For {{firm_name}}
Chartered Accountants
Firm Registration No.: {{firm_registration_no}}
_______________________________
{{engagement_partner}}
Partner
Membership No.: {{icai_membership_no}}
Place: ____________________
Date: 29 May 2026
Acknowledgement on behalf of {{client_name}}
We acknowledge receipt of the above engagement letter and agree to the terms set out above.
_______________________________
Name:
Designation:
Date:
