Audit Engagement Letter

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Audit Engagement Letter Powered By Docstoc

      Date :

      The Board of Directors
      (Company Name)



      You have requested that we audit the balance sheet of the Company as of June 30, _____ and the
      related profit and loss account, statements of cash flows and changes in equity for the period/year then
      ending. We are pleased to confirm our acceptance and our understanding of this engagement by means
      of this letter.

1.    Audit

1.1   We will conduct our audit in accordance with Auditing Standards as applicable in Pakistan with the
      objective of expressing an opinion whether the financial statements conform with approved accounting
      standards as applicable in Pakistan, and, give the information required by the Companies Ordinance,
      1984, in the manner so required and respectively give a true and fair view of the state of the Company’s
      affairs as at June 30, ______ and of the profit, its cash flows and changes in equity for the period/year
      then ended. Those Standards require that we plan and perform the audit to obtain reasonable assurance
      about whether the financial statements are free of material misstatements. An audit includes examining,
      on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
      also includes assessing the accounting principles used and significant estimates made by management,
      as well as evaluating the overall financial statement presentation.

1.2   Our report will be addressed to the Board of Directors of the Company. We cannot provide assurance
      that an unqualified opinion will be rendered, since circumstances may arise in which it would be
      necessary for us to modify our report or withdraw from the engagement. In such circumstances, our
      findings or reasons for withdrawal will be communicated to the Board of Directors.

1.3   In view of the test nature and other inherent limitations of an audit, together with the inherent limitations
      of any accounting and internal control system, there is an unavoidable risk that even some material
      misstatements may remain undiscovered.

1.4   In addition to our report on the financial statements, we expect to provide you with a separate letter
      concerning any material weaknesses in accounting and internal control systems, which come to our
      notice. The extent to which we examine internal controls, and hence have the opportunity to observe
      weaknesses, is impacted by our determination of the most efficient audit approach. We are not required
      by auditing standards to make an examination of internal controls beyond that which we make in
      determining the nature, extent and timing of our other audit procedures, and we have not been engaged
      to report on the Company’s internal control structure.

1.5   The Company will make available to us all records, documentation, and information including minutes of
      all Management and Board of Directors’ meetings we request in connection with our audit, that all
      material information will be disclosed to us, and that we will have the full cooperation of the Company’s

1.6   The responsibility for the preparation of financial statements including adequate disclosures is that of the
      management of the Company. This includes the maintenance of adequate accounting records and
      internal controls, the selection and application of accounting policies, and the safeguarding of the assets
      of the Company. Management is also responsible for identifying and ensuring that the Company
      complies with laws and regulations applicable to its activities. As part of our audit process, we will
      request from management written confirmation concerning representations made to us in connection with
      the audit.

1.7   In addition, ISA 240, “The Auditor’s Responsibility to Consider Fraud and Error in an Audit of Financial
      Statements”, requires that we obtain specific written representations from management that:

      (a)   it acknowledges its responsibility for the implementation and operations of accounting and internal
            control systems that are designed to prevent and detect fraud and error;

      (b)   it believes the effects of those uncorrected financial statement misstatements aggregated by us
            during the audit are immaterial, both individually and in the aggregate, to the financial statements
            taken as a whole;

      (c)   it has disclosed to us all significant facts relating to any frauds or suspected frauds known to
            management that may have affected the entity; and

      (d)   it has disclosed to us the results of its assessment of the risk that the financial statements may be
            materially misstated as a result of fraud.

      These specific items will be included in our request for written confirmation concerning representations
      made to us in connection with the audit.

2.    Other terms and Conditions

2.1   If you require us to complete our work under this engagement contract or, any part of it, by a specific
      date or time, you will inform us in writing of your requirement. Whilst we will make every effort to
      complete such work by the date specified, it is imperative that meeting any such requirement will rely on
      you providing reasonable notice of your requirement and the timely provision of such information as we
      may need to complete the work concerned.

2.2   In connection with this engagement, you agree that the liability to the Company of this firm, its partners,
      directors, employees, and agents (in contract or under statute or otherwise) for any loss or damage
      suffered by the Company arising out of, or in connection with this engagement, however the loss or
      damage that is caused, including our negligence but not our wilful default, shall be limited to the amount
      of fee charged for the engagement.

2.3   TMIRCO. will not be responsible or liable if information material to our task is withheld or concealed from
      us or wrongly represented to us.

2.4   We will treat as such all confidential proprietary information obtained from the Company and will not
      disclose such information to others, except to those persons engaged in providing services to you, or use
      such information except in connection with the performance of the services agreed to in this letter. This
      undertaking shall not apply to any of the information that we are required by law or by the requirements
      of any regulators or by specific professional standards to disclose or that is in or hereafter enters the
      public domain. Under the directive issued by the Institute of Chartered Accountants of Pakistan to audit
      firms, our working paper files pertaining to the audit of the Company may be subject to Quality Control
      Review (QCR) without any reference to the Company.

2.5   You will indemnify and hold harmless TMIRCO, its proprietor, agents, and employees from, and against,
      any and all costs, expenses, losses, claims, demands, actions, suits, or proceedings paid, incurred, or
      suffered or made or initiated against it by any third party arising out of, or in connection with, this
      engagement regardless of whether the loss or damage is caused other than through our fraud or wilful

3.    Fee

3.1   Our fees are based on the time required by the individuals assigned to the engagement plus direct out of
      pocket expenses. Individual hourly rates vary according to the degree of responsibility involved and the
      experience and skill required. Our audit fees for the year ending June 30, _______ will be Rs.
      _____________. Audit fee for period subsequent to June 30, ________ will be subject to separate
      correspondence without amending this letter.

3.2   The above fee is exclusive of reimbursements of out of pocket expenses at actual which would include
      travelling, conveyance, communication, printing and photocopying etc. At present, there is no tax or
      government levy on our billings, however, in future if any tax or government levy is charged on our billing,
      the same will be payable by the Company in addition to our professional fee.

      This letter forms the entire agreement and understanding between us with respect to the subject matter
      hereof. This letter supersedes all previous arrangements and understandings between the parties with
      respect to the subject of this letter, which shall cease to have any further force or effect. Any variation to
      the terms of this letter shall be made in writing and will not be effective unless signed by the proprietor of
      TMIRCO or by a duly authorized representative.

      This agreement is made under, and shall be governed by, Pakistan law, and all disputes arising from or
      under this agreement shall be subject to the exclusive jurisdiction of the courts in Pakistan.

      This letter will be effective for future periods unless it is terminated, amended or superseded. Please sign
      and return the attached copy to indicate that it is in accordance with your understanding of the audit

      Yours faithfully,

      I confirm the above terms of audit for and on behalf of the Company.

      Authorised signatory: ___________________

      Name:                  ___________________

      Position:              ___________________

      Date:                  ___________________


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