rahul
(a)
(1620 Points)
Replied 21 October 2018
{The following letter is for use as a guide and will need to be varied according to individual
requirements and circumstances relevant to the engagement.}
[Date]
The Board of Directors (or the appropriate representative of senior management).
Subject: Engagement Letter Dear Sirs, I/We refer to the letter No. ……………. dated
…….received from ………………………………….(Name of the relevant authority) informing
me/us about my/our appointment to carry out the statutory audit of the (name of the branch)
branches of your Bank for the financial year beginning April 1,20XX and ending 31st March
20YY, including Tax Audit, issuance of the Long Form Audit Report and, as a part of the
audit, verification and/ or certification of certain specific aspects pertaining to these
branches, as listed in your aforementioned letter.
1. Scope and Objective
We are pleased to confirm our acceptance for the aforementioned assignment through the
Letter of Acceptance attached herewith and the following sets out the area of responsibility
of the Branch Management and myself/ourselves subject to the following:
i) Our audit of the financial statements of these branches will be conducted with the objective
of our expressing an opinion on the truth and fairness of the financial statements of these
branches. These financial statements include the Balance Sheet (Form A) and the Profit and
Loss Account (Form B) (collectively referred as “Financial Statement”) for the year ended
31st March 20XX.
ii) We will conduct our audit in accordance with the Standards on Auditing (SAs) and any
other applicable pronouncement issued by Institute of Chartered Accountants of India (ICAI),
as well as the requirements of the Banking Regulation Act, 1949, and the guidelines/
directions issued by the Reserve Bank of India under the said statutes, from time to time.
Those Standards require that we comply with the ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatements.
iii) An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend upon the auditor‟s
judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. An audit also includes evaluating the
appropriateness of accounting principles used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall presentation of the
financial statements.
iv) Because of the inherent limitations of an audit, together with the inherent limitations of
internal control, there is an unavoidable risk that some material misstatements may not be
detected, even though the audit is properly planned and performed in accordance with SAs.
v) In making our risk assessments, we consider internal control relevant to the entity‟s
preparation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity‟s internal control. However, we will communicate to you in writing
concerning any significant deficiencies in internal control relevant to the audit of the financial
statements that we have identified during the audit.
vi) We invite your attention to the fact that, in terms of RBI Circular No. DBS.FGV.(F).No.
BC/ 23.08.001/2001-02 dated May 3, 2002 relating to implementation of recommendations
of the Committee on Legal Aspects of Bank Frauds (Mitra Committee) and the
recommendations of the High Level Group set-up by the Central Vigilance Commission
applicable to all scheduled commercial banks (excluding RRBs) we are required to report to
the RBI anything susceptible to fraud or fraudulent activity or any act of excess power or any
foul play in any transaction.
2. Management’s Responsibility
Our assignment will be conducted on the basis that the branch management and, where
appropriate, those charged with governance of the bank acknowledge and understand that
they have responsibility:
(a) For the preparation of financial statements that give a true and fair view in accordance
with the applicable Financial Reporting Framework. This includes:
the responsibility for the preparation of financial statements on a going concern basis;
the responsibility for selection and consistent application of appropriate accounting
policies, including implementation of applicable Accounting Standards, along with proper
explanation relating to any material departures from those Accounting Standards;
the responsibility for making judgements and estimates that are reasonable and prudent,
so as to give a true and fair view of the state of affairs of the branch at the end of the
financial year and of the profit or loss of the branch for that period.
(b) for such internal controls, as the branch management determines, are necessary to
enable the preparation of financial statements, that are free from material misstatement,
whether due to fraud or error. The responsibility for internal controls also implicitly enshrines
the responsibility for compliance with the relevant directions/ circulars of the Reserve Bank
of India, including for those aspects which have been specifically listed for verification/
certification by us in your aforementioned letter; and
(c) to provide us with:
(i) access to all information, including the books, account, vouchers and other records and
documentation, of the branch, whether kept at the branch office or elsewhere, of which the
branch management is aware, that is relevant to the preparation of the financial statements
such as records, documentation and other matters;
(ii) additional information that we may request from the branch management for the purpose
of the audit, including any internal audit, concurrent audit, revenue audit, stock audit,
Reserve Bank of India‟s Inspection report; and
(iii) unrestricted access to persons within the entity, from whom we determine it necessary
to obtain audit evidence. This includes our entitlement to require from the officers of the
branch such information and explanations, as we may think necessary for the performance
of our duties as auditor.
3. Other Matters
As part of our assignment, we will request from the branch management, written
confirmation concerning representations made to us in connection with the audit, in
accordance with Standard on Auditing 580 – “Written Representations”, issued by the ICAI
including confirmations in respect of the balances held by the Branch with other banks, and
such other items on the financial statements of the Branch, as may be considered necessary
by us for the purpose of our assignment.
It may also be noted that non provision of any information/ confirmation, requested by us
from the branch management, may result in limitation on the scope of our assignment. In
terms of Standard on Auditing 720 – “The Auditor‟s Responsibility in Relation to Other
Information in Documents Containing Audited Financial Statements” issued by the ICAI, we
request you to provide to us a Draft of the Annual Report containing the audited financial
statements so as to enable us to read the same and communicate material inconsistencies,
if any, with the audited financial statements, before issuing the auditor‟s report on the
financial statements.
We also wish to invite your attention to the fact that, our audit process is subject to 'peer
review'/ „quality review‟ under the Chartered Accountants Act, 1949, to be conducted by an
independent reviewer. The reviewer may inspect, examine or take abstracts of our working
papers, in the course of the peer review / quality review.
We look forward to full cooperation from your staff during our audit. Our fees for the said
audits (excluding fees for Tax Audit and the travelling expenses will be as specified by the
Reserve Bank of India/ State Bank of India
Our fees for audit of Non Business Offices/ CMS Branches, as well as the tax audit fees of
the branches, would be as specified in your aforementioned letter. Please sign and return
the attached copy of this letter to indicate your acknowledgement of, and agreement with,
the arrangements for our aforementioned assignment/s including our respective
responsibilities.
(Kindly also mark a copy of such acknowledgement to the concerned official/s of the
respective branch managements.)
XYZ & Co. Chartered Accountants
………………………… (Signature) „
(Name of the Member)
Designation
Date:
Place:
Acknowledged on behalf of ………………. Branch of …………………Bank
…………………….. (Signature)
Name and Designation
Date
CAclubindia
