Isa 210 Summary

ISA 210 Summary : Agreeing the Terms of Audit Engagements
ISA 210 Scope

This ISA deals with the auditors responsibilities in agreeing the terms of the audit engagement with
management and, where appropriate, those charged with governance.
establishing certain preconditions for an audit.
establishing responsibility which rests with management and, where

appropriate, those charged with governance.
Effective Date of ISA 210 for periods beginning on or after December 15, 2009.
ISA 210 Objective
To accept or continue an audit engagement only when the basis upon which it is to be performed has
been agreed.
Establishing whether the preconditions for an audit are present; and

Confirming that there is a common understanding between auditor and
management and where appropriate those charged with governance.
Definitions
For definitions refer www.leterms.com
ISA 210 Requirements
Financial reporting framework to be applied in the preparation of the financial
statements shall be acceptable.
Management acknowledges and understands its responsibility;
For the preparation of the financial statements in accordance with the
applicable financial reporting framework, including where relevant their fair

presentation;
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; and

To provide auditor with access of all information, additional information
and unrestricted access to person in company for audit.

If limitation on the scope of audit prior to acceptance of audit that will result
indisclaiming opinion dont accept engagement unless required by law.

Agree the terms of audit engagement with management or those charges with
governance and Engagement letter shall at least include;
The objective and scope of the audit of the financial statements;
The responsibilities of the auditor;

The responsibilities of management;
Identification of the applicable financial reporting framework for the
preparation of the financial statements; and

Reference to the expected form and content of any reports to be issued
by the auditor and a statement that there may be circumstances in which a
report may differ from its expected form and content.
If above components of engagement letter in law and regulation, engagement

letter not necessary.
On recurring audit assess the change in circumstances and need to revise

engagement letter.
There must be reasonable justification for change in engagement letter, after it

has been agreed.
If change not agreeable with management, Withdraw and consider the legal or
contractual obligation.
Financial Reporting Standards Supplemented by Law or Regulation
Auditor consider the conflict between law and standards;
Additional disclosure or
change description of applicable financial reporting framework
Financial Reporting Framework Prescribed by Law or RegulationOther Matters Affecting

Acceptance
Financial reporting frame unacceptable but required by lawaccept

engagement if;
Management agree to provide additional disclosures
Add emphasis of matter paragraph in audit report.
Dont add true and fair like statement unless required and allowed by
law.
If above conditions are not meet and audit required by law, evaluate effect of
misleading information and include reference to that in the engagement letter.
Auditors Report Prescribed by Law or Regulation

In some cases law prescribe wording of audit report, auditor shall consider whether users might
misunderstand the assurance obtained, if so then Whether additional explanation in the auditors
report can mitigate possible misunderstanding. If cannot be mitigated dont accept audit engagement
unless required by law.
An audit conducted in accordance with such law or regulation does not comply with ISAs. Accordingly,
the auditor shall not include any reference within the auditors report to the audit having been
conducted in accordance with ISAs.

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ISA 210 Summary : Agreeing the Terms of Audit Engagements

ISA 210 Scope

establishing certain preconditions for an audit.

establishing responsibility which rests with management and, where

Establishing whether the preconditions for an audit are present; and

Financial reporting framework to be applied in the preparation of the financial

statements shall be acceptable.

Management acknowledges and understands its responsibility;

For the preparation of the financial statements in accordance with the

applicable financial reporting framework, including where relevant their fair

misstatement, whether due to fraud or error; and

and unrestricted access to person in company for audit.

indisclaiming opinion dont accept engagement unless required by law.

The objective and scope of the audit of the financial statements;

The responsibilities of the auditor;

Identification of the applicable financial reporting framework for the

preparation of the financial statements; and

If above components of engagement letter in law and regulation, engagement

On recurring audit assess the change in circumstances and need to revise

There must be reasonable justification for change in engagement letter, after it

Financial Reporting Standards Supplemented by Law or Regulation

Auditor consider the conflict between law and standards;

Financial Reporting Framework Prescribed by Law or RegulationOther Matters Affecting

Financial reporting frame unacceptable but required by lawaccept

Management agree to provide additional disclosures

Add emphasis of matter paragraph in audit report.

Auditors Report Prescribed by Law or Regulation

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