What it is
The decision to accept or continue an engagement is a quality control, not a formality. This form records the facts, the integrity inquiries, the preconditions for the engagement, competence and capacity, independence, the engagement risk and the decision, with signature lines for the engagement partner and any second approver.
It supports the acceptance and continuance responses in a firm’s system of quality management under SQMS No. 1 and the preconditions for an audit in AU-C 210. A separate section covers annual reassessment for continuing clients.
When to use it
- Before accepting a new audit, review, compilation or other engagement.
- At each annual renewal of a continuing client.
- When circumstances change, such as new management, a dispute or new services.
What’s inside
- Client and engagement details
- Integrity of management and the entity, including predecessor inquiry
- Preconditions: framework, management responsibilities and access
- Competence and capacity, independence, and a risk rating table
- Continuance reassessment, decision and approvals
Standard cited
This template follows SQMS No. 1 / 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
What are the preconditions for an audit?
An acceptable financial reporting framework, and management’s acknowledgment of its responsibility for the financial statements, for internal control relevant to them and for giving the auditor the access and information needed. AU-C 210 requires agreement on these terms in the engagement letter.
Do I need predecessor communication?
Inquiring of the predecessor, with the client’s permission, is a standard step when taking over an engagement. The requirements differ by engagement type and by state, so apply the standard for the engagement you are accepting and the firm’s policy.
Does this replace the independence confirmation?
No. It points to the independence confirmation and the nonattest services evaluation; those forms hold the detail.
Related templates
- Engagement Independence Confirmation (AICPA Code ET 1.200)
- Nonattest Services Independence Evaluation Form
- Audit Engagement Letter (AU-C 210)
Last updated 11/05/2026. All free templates.