What it is
An audit engagement letter records the terms the auditor and management agree before fieldwork starts. AU-C 210 requires the agreed terms to be in writing and lists what they must cover.
This template covers a financial statement audit of a nonissuer (private company or not-for-profit) under US GAAS. Every client-specific item is a [bracketed placeholder].
When to use it
- Before starting a new audit, once acceptance procedures are done.
- Each year on a recurring audit, or when terms, scope, management or the framework change.
- When adding nonattest services, so management’s responsibilities for them are on record.
What’s inside
- Objective and scope of the audit, and the framework (US GAAP or a special purpose framework)
- Auditor responsibilities, including the inherent limits of an audit
- Management responsibilities, including internal control, access and written representations
- Expected form and content of the report, and the note that it may differ
- Nonattest services, fees, billing, timing, record retention and signatures
Standard cited
This template follows AU-C 210. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 210 explained.
Questions
Does AU-C 210 require a signed engagement letter?
AU-C 210 requires the agreed terms to be recorded in an engagement letter or other suitable written agreement. Firms typically have both the CPA firm and management sign it, which records that management acknowledged the terms.
Do I need a new engagement letter every year?
AU-C 210 has the auditor consider each year whether the terms need revising or the entity needs reminding of them. Most firms issue a new letter annually, and always do so when scope, management, ownership or the framework changes.
Can I add a limitation of liability clause?
Some firms do. Whether a clause is allowed depends on the AICPA Code’s independence rules on indemnification and limitation of liability, state board rules and, for some clients, regulators. Talk to counsel and your professional liability insurer before adding one.
Related templates
- Management Representation Letter (AU-C 580)
- PBC List — Audit Request List (Excel)
- Audit Planning Memo (AU-C 300)
Last updated 11/04/2026. All free templates.