Engagement Letter Essay

The memo verifies the agreement of the purpose of the engagement and the quality and constraints of the services the firm offers. Talbot Auditing Firm will review the financial statements of Apollo Shoes at the end of the year. Talbot auditing firm will review the accounts such as the operations records, retained earnings, and cash flow accounts. An audit’s goal is to form an opinion about the fairness of the accounting records in accordance with Generally Accepted Accounting Principles. The audit will be performed according to auditing standards generally accepted in the United States. The firm will perform tests of the accounting records and other procedures essential in stating an opinion. If the opinion is not unqualified, the firm will give reasons. If the firm cannot complete the audit, they might not give out a report on the engagement. The firm will test the existence of inventory, and confirm receivables and payables and other assets and liabilities by letters to a few customers, creditors, and financial institutions. The auditor will ask for a letter of representation from the company’s attorney. The attorney might bill Apollo Shoes for replying to the query. When the firm concludes the audit, the firm may ask for written statements about the financial statements and other issues. The auditor will carry out the audit to know if the records are free of material misstatement. The auditor’s intention is to give reasonable, not absolute assurance. The auditor will not provide a thorough assessment of each transaction so a risk of material errors, fraud, and illegal acts might exist and go unnoticed by the auditor. The firm may terminate the services for nonpayment and consider the engagement completed upon a written request of termination even though the auditor fails to complete a report. Apollo Shoes will pay for extended time and out-of-pocket cost through date of termination. If you agree to the above conditions of this engagement, sign the letter at the bottom. Please return the signed letter and keep a copy for company records. Thank you for your prompt attention to this matter. Do not hesitate to contact me if you have questions.