ACCA Audit and Assurance (F8) Practice Exam

What action should auditors take regarding the letter of engagement after they accept an appointment?

1. File it with the board

2. Submit it to regulatory bodies

3. Confirm its details with management

4. Set up and submit it

The correct answer is: Set up and submit it

In the context of auditing, when auditors accept an appointment, it is important for them to set up and submit the letter of engagement. The letter of engagement serves as a formal contract that outlines the scope of the audit services to be provided, the responsibilities of both the auditors and the client, and the terms under which the audit will be conducted. Setting up the letter involves ensuring that it accurately reflects the agreement between the client and the auditors regarding the nature and extent of the audit work, thereby helping to manage expectations and providing a clear framework for the audit process. This document also serves as a reference point throughout the audit, ensuring both parties are aligned on objectives and deliverables. Submitting the letter to the appropriate parties, whether that be the management team or the board, depends on the established protocols of the firm and the client. It ensures that everyone relevant is informed and agrees to the terms before the audit begins. This proactive approach protects both parties and facilitates effective communication during the audit process.