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Is it legally necessary and/or advisable to issue a new audit engagement letter each year to existing clients ? What's the legislative or ATO guidance reference please ?
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Hi Awan
Thanks. The answer is in Auditing Standard ASA 210 - Agreeing the Terms of Audit Engagements and Guidance Statement GS 009 - Auditing Self-Managed Superannuation Funds.
The answer is that a new audit engagement letter is not required every year. Per para 13 of ASA 210 "on recurring audits, the auditor shall assess whether circumstances require the terms of the audit engagement to be revised and whether there is a need to remind the entity of the existing terms of the audit engagement. "
More information is provide in GS 009
"54.ASA210 does not require engagement letters to be issued every year. However, on recurring audits, the auditor considers whether it is appropriate to confirm the terms of the engagement in writing due to the circumstances of the engagement, including when there is:
A revision of the terms of the engagement.
An indication that the trustees misunderstand the objective and scope of the audit.
A change in trustees.
A significant change in the nature or size of the SMSF.
Significant changes in the SISA, SISR or other regulatory requirements, such as changes to the requirements to be reported on in the approved form auditor‟s report or ACR.
55.An example engagement letter is attached as Appendix1 of this Guidance Statement."
It is noted that many auditors issue a new engagement letter every year.
Thanks
SMSF AAA