4.1 Obtaining, accepting and retention of an audit engagement

Obtaining, accepting, and retaining an audit engagement involves several important steps and considerations. Here’s an overview of the process:

1. Obtaining an Audit Engagement:
   • Marketing and Proposal: The audit firm may engage in marketing activities to attract potential clients. This may involve showcasing the firm’s expertise, experience, and credentials. The firm may submit a proposal outlining the scope of work, fees, and other relevant details to potential clients.
   • Client Evaluation: Before accepting an engagement, the audit firm evaluates the client’s reputation, integrity, financial stability, and other factors. This evaluation helps determine if the firm is willing to accept the client.
2. Acceptance of an Audit Engagement:
   • Professional Judgment: The audit firm exercises professional judgment in deciding whether to accept the engagement. Factors considered include the firm’s capacity, expertise, resources, independence, and potential conflicts of interest.
   • Engagement Letter: Once the decision to accept the engagement is made, an engagement letter is drafted. The engagement letter formalizes the terms of the engagement, including the scope of work, responsibilities of both parties, audit fees, and any specific arrangements or requirements.
3. Retention of an Audit Engagement:
   • Ongoing Evaluation: The audit firm periodically evaluates the client relationship to determine whether the engagement should be retained. This evaluation may include assessing the client’s cooperation, integrity, adherence to deadlines, and other factors that may impact the effectiveness of the audit process.
   • Professional Skepticism: Throughout the engagement, auditors maintain professional skepticism and continuously evaluate any factors that may impact their ability to provide an independent and objective audit opinion.
   • Independence Monitoring: The audit firm has processes in place to monitor and ensure the ongoing independence of the audit team. This includes periodic assessments of potential conflicts of interest and compliance with relevant independence rules and regulations.