The objective of the auditor, per ISA 210 Agreeing the terms of audit engagements is accept or continue an audit engagement only when the basis upon which it is to be performed has been agreed. This is done by:
1. establishing whether the preconditions for an audit are present; and
2. confirming that there is a common understanding between the auditor and management.
To establish if the preconditions for an audit are present ISA 210 requires the auditor to:
a. establish if the financial reporting framework to be used in the preparation of the financial statements is acceptable b. obtain the agreement of management that it acknowledges and understands its responsibility:
- for the preparation of the financial statements
- for internal controls to ensure that the financial statements are not materially misstated
- to provide the auditor with all relevant and requested information and unrestricted access to all personnel.
1. establishing whether the preconditions for an audit are present; and
2. confirming that there is a common understanding between the auditor and management.
To establish if the preconditions for an audit are present ISA 210 requires the auditor to:
a. establish if the financial reporting framework to be used in the preparation of the financial statements is acceptable b. obtain the agreement of management that it acknowledges and understands its responsibility:
- for the preparation of the financial statements
- for internal controls to ensure that the financial statements are not materially misstated
- to provide the auditor with all relevant and requested information and unrestricted access to all personnel.