Balance Sheet Only Audit Engagement Letter Template for England and Wales

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Key Requirements PROMPT example:

Balance Sheet Only Audit Engagement Letter

"Need a Balance Sheet Only Audit Engagement Letter for my UK-based manufacturing company with annual turnover of £5M, requiring specific focus on inventory valuation and including group reporting requirements as we're a subsidiary of a German parent company."

Document background
The Balance Sheet Only Audit Engagement Letter is utilized when a company requires a limited scope audit focusing exclusively on its balance sheet, rather than a full statutory audit. This document, governed by English and Welsh law, establishes the professional relationship between the audit firm and the client, detailing specific responsibilities, limitations, and expectations. It ensures compliance with UK audit standards while providing a more focused and potentially cost-effective alternative to a full audit. The letter addresses key aspects including scope, methodology, limitations, fee structure, and relevant professional standards.
Suggested Sections

1. Letter Header: Includes firm letterhead, date, reference number and addressee details

2. Introduction: Opening paragraph confirming the engagement to perform a balance sheet only audit

3. Scope of Audit: Detailed description of the balance sheet only audit scope and its limitations

4. Auditor's Responsibilities: Clear outline of the auditor's duties, obligations and professional requirements

5. Management's Responsibilities: Detailed list of management obligations including preparation of financial statements and internal controls

6. Basis of Fee: Fee structure, payment terms and billing arrangements

7. Agreement of Terms: Formal acknowledgment and acceptance section with signature blocks

Optional Sections

1. Group Audit Considerations: Additional terms when the client is part of a larger group structure requiring coordination with group auditors

2. Specialist Input: Terms covering the use of external experts or specialists in specific areas

3. Overseas Reporting: Additional requirements for international reporting or cross-border considerations

4. Other Services: Description of any additional services agreed to be provided alongside the audit

Suggested Schedules

1. Standard Terms of Business: Detailed terms and conditions covering all aspects of the professional relationship

2. Fee Schedule: Detailed breakdown of fees, hourly rates, and charging structure

3. Data Processing Agreement: Terms governing the processing of personal data in compliance with UK GDPR

4. Engagement Team Structure: Details of key team members, their roles and responsibilities

5. Quality Control Procedures: Overview of the firm's quality control procedures applicable to the engagement

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Clauses
Relevant Industries
Relevant Teams
Relevant Roles
Industries

Companies Act 2006: Primary legislation governing company law in the UK, particularly sections relating to audit requirements and statutory audits

Companies (Audit, Investigations and Community Enterprise) Act 2004: Supplementary legislation covering specific aspects of company audits and investigations

International Standards on Auditing (UK): Professional standards that set out how audits should be conducted in the UK

FRC Ethical Standard: Standards set by the Financial Reporting Council governing ethical requirements for auditors

UK Corporate Governance Code: Set of principles of good corporate governance for listed companies

APB's Ethical Standards for Auditors: Professional ethical guidelines that auditors must follow in their practice

FRC Requirements: Regulatory requirements set by the Financial Reporting Council for auditors and accountants

ICAEW Guidelines: Professional guidelines set by the Institute of Chartered Accountants in England and Wales

FCA Regulations: Financial Conduct Authority regulations applicable to audits of regulated entities

UK General Data Protection Regulation: Post-Brexit data protection legislation governing the processing of personal data

Data Protection Act 2018: UK's implementation of data protection standards, working alongside UK GDPR

Money Laundering Regulations 2017: Regulations concerning anti-money laundering and terrorist financing requirements

Proceeds of Crime Act 2002: Legislation dealing with money laundering and proceeds of crime

Common Law Contract Principles: Fundamental principles of contract law developed through case law

Unfair Contract Terms Act 1977: Legislation regulating unfair terms in contracts, particularly limitation of liability clauses

Consumer Rights Act 2015: Legislation protecting consumer rights, applicable if the client qualifies as a consumer

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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