Question: Camer Associates CPAs received a RPF from the audit

Camer & Associates, CPAs, received a RPF from the audit committee of Haspur Company’s board of directors. Haspur is a mid-sized public company that fired its prior auditors due to scheduling issues. Haspur explained that the prior auditors did not handle many public company clients and were too slow in responding to the company’s requests. Haspur indicated that the company needs to have an integrated audit for the fiscal year ended September 30, 2009 as well as assistance with the company’s income tax return preparations. Jarrett Camer, CPA, knew that Haspur had a favorable reputation in the business community, as the company had been featured in a recent news article. Moreover, the engagement was determined to be a good fit for Camer’s firm in terms of its industry expertise and timing of the engagement. In addition, Camer verified his independence from Haspur as well as that of his associates. As a result, Camer requested permission to meet with Haspur’s predecessor auditors, bankers, and attorneys for the purpose of making the standard audit inquiries regarding new audit engagements. Hasper’s audit committee agreed and authorized these parties to cooperate with the requests of Camer & Associates through their inquiries and responses.
After meeting with these parties, Camer & Associates determined that Haspur was a desirable client. Camer prepared an audit engagement letter and mailed it to Haspur’s audit committee. This letter set forth the terms of the engagement, using the standard language. Supplemental language was included in the letter regarding the agreement for income tax assistance, involvement of the predecessor auditors, and fees and billing arrangements.

a. List the standard matters that are generally included in an engagement letter.
b. What are the benefits derived from preparing an engagement letter?

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  • CreatedJanuary 21, 2015
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