An auditor is documenting the engagement terms for the audit of a nonissuer. Which of the following matters is LEAST likely to be included in the engagement letter?

Answer options:

Management's responsibility for the financial statements and internal control.

The objective and scope of the audit of the financial statements.

Specific procedures to be performed in high-risk areas.

A statement that because of the inherent limitations of an audit, some material misstatements may not be detected.

How to approach this question

Differentiate between the contract (engagement letter) and the audit plan. The letter sets terms; the plan sets procedures.

Full Answer

C.Specific procedures to be performed in high-risk areas.✓ Correct

Specific procedures to be performed in high-risk areas.

AU-C 210 requires the engagement letter to include the objective/scope, auditor responsibilities, management responsibilities, and the financial reporting framework. It does NOT include specific audit procedures, as this would compromise the unpredictability of the audit and is a matter of professional judgment determined during planning.

Common mistakes

Confusing the engagement letter with the audit plan.

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