Sample of Engagement Letter

Topics: Audit, Internal control, Financial audit Pages: 6 (1537 words) Published: September 22, 2012
[This sample letter is for REFERENCE ONLY. IMC schools should also refer to EDBC No. 17/2008 on “Appointment of Auditors and Audit Engagement Letter” or its update.]

Sample Audit Engagement Letter (for REFERENCE ONLY)

Our Ref. :


The Incorporated Management Committee of
(name of IMC School) (“School”)

Dear Sirs,


The purpose of this letter is to set out the basis on which we are to act as auditors of the IMC and the respective areas of responsibility of the Incorporated Management Committee (“IMC”) and of ourselves.


1.1As IMC of the School, you are responsible under the Education Ordinance for maintaining proper books or records of accounts and other financial records. You are also responsible for preparing accounts which present fairly (see Note) the financial transactions and financial position of the IMC and for ensuring that the IMC has complied with the relevant provisions of the Education Ordinance, the Codes of Aid, the relevant letters, circulars and guidelines issued to the IMC by the Education Bureau (EDB), if any.

1.2You are responsible for ensuring that the IMC has complied with laws and regulations, which are relevant to the operations of the IMC.

1.3You are responsible for procuring your Managers to give us full co-operation to facilitate our audit work and for making available to us, as and when required, all the IMC’s books of account and all other relevant records and related information, including minutes of all meetings of the IMC.

1.4We have a statutory responsibility under the Education Ordinance to report to the EDB whether in our opinion the accounts present fairly (see Note) the financial transactions and financial position of the IMC. In arriving at our opinion, we are required to consider the following matters, and to report on any in respect of which we are not satisfied:

(a)Whether proper books or records of account and other financial records have been maintained;

(b)Whether the IMC’s income and expenditure account and balance sheet are in agreement with the books of accounts; and

(c)Whether we have obtained all the information and explanations which we consider necessary for the purposes of our audit.

1.5We have a professional responsibility to report if the accounts do not comply in any material respect with applicable accounting standards, unless in our opinion the non-compliance is justified in the circumstances. In determining whether or not the departure is justified, we consider:

(a)Whether the departure is required in order for the accounts to present fairly; and

(b)Whether adequate disclosure has been made concerning the departure.


2.1Our audit will be conducted in accordance with Hong Kong Statements on Auditing and Statements of Auditing Standards issued by the Hong Kong Institute of Certified Public Accountants, and will include such tests of transactions and of the existence, ownership and valuation of assets and liabilities as we consider necessary. We shall obtain an understanding of the accounting systems and internal control systems in order to assess their adequacy as a basis for the preparation of the accounts and to establish whether proper books of accounts have been maintained by the IMC. We shall expect to obtain such appropriate evidence as we consider sufficient to enable us to draw reasonable conclusions there from.

2.2The nature and extent of our procedures will vary according to our assessment of the IMC’s accounting system and, where we wish to place reliance on it, the internal control systems, and may cover any aspect of the IMC’s operations that we consider appropriate. Our audit is not designed to identify all significant weaknesses in the IMC’s systems but, if such weaknesses come to our...
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