An engagement letter, commonly referred to as a letter of engagement, is a document used by auditors to delineate clearly the scope of their responsibilities in an audit engagement. It serves as the written confirmation of the auditors' acceptance of the appointment, the scope of the audit, the form of the report, and includes any non-audit services to be rendered.
The foundational element ensuring that auditors maintain their integrity and provide objective professional and business judgments in their work. Specific threats to this independence are extensive and regulated by both legislation and professional bodies.
An alleged practice where auditors reduce their fees for statutory audits to attract clients, intending to compensate through highly profitable non-audit services.
Additional services provided by audit firms to their clients beyond the traditional audit engagement, such as tax advice and consultancy. Debate exists regarding the impact of these services on auditor independence.
