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andrew wallis

Apr 14, 2023

Engagement letter process

in SMSF Technical Forum

I have been engaged by an accounting firm to act as a contract auditor to perform the audit of various of their SMSF clients as a means of adhering to independence obligations.

The accountant has sent an engagement letter to their SMSF clients to , amongst other things, undertake the audit pursuant to their right to engage contractors to perform the audit service. I am usually engaged to perform a batch of 10 audits at a time.

The accountants contention is that I, as the auditor, am engaged by the accounting firm and not directly by the SMSF. I have prepared an engagement letter with the accountant and I obtain from them a representation letter at the conclusion of the audit. I receive one representation letter from the accountant. The accountant receives a representation letter from the SMSF.

Does this engagement process meet my ethical and legal responsibilities? I have no direct contact with the SMSF and they are in no way 'my' clients. My client is practically and effectively the accounting firm. Comments would be appreciated.

12 comments

Comments (12)

Unknown member

Apr 24, 2023

You are engaged by each fund and as such should have an engagement letter and a representation letter from each fund. Seems to me like the accountant is trying to place undue pressure on you which brings into question independence.

Your client is each fund. The accountant is placing undue pressure on you and is not acting ethically. I'd be giving them a wide birth and declining to take on them or their funds. It can only lead to heartache.

Unknown member

Apr 24, 2023

Replying to

Agreed that the client is the party Audit is engaged with.

Regardless of whether dealing with the practice or the trustee who does their own accounting, as an auditor we are obliged to make sure we have an independent source of asset verification.

No audit should be signed off without that source document.