This presentation is an overview of SA 210 (R). Prepared with Prof. S. Sircar. Dr. Soheli Ghose ( Ph.D (University of Calcutta), M.Phil, M.Com, M.B.A., NET (JRF), B. Ed). Assistant Professor, Department of Commerce,St. Xavier's College, Kolkata. Guest Faculty, M.B.A. Finance, University of Calcutta, Kolkata

1. SA 210 (Revised)

2. Scope of SA 210 (Revised)
The Auditor’s responsibilities in agreeing
the ‘terms of audit engagement with the
Management/TCWG.
Note:
i. This SA applies only to audit engagements of
financial statements.
ii. Management includes TCWG.
iii. Where the scope and objectives of audit and the
auditor’s responsibilities are laid down in any
applicable statute (e.g., the Companies Act, 2013;
etc.) the role of the Engagement Letter will be
merely informative.

3. Objective of the Auditor
To accept/continue audit engagement only
when:
a) The PRECONDITIONS for an audit are
met, and
b) Confirming that there is COMMON
UNDERSTANDING between the
Auditor and the Management with
regard to the ‘Terms of Audit
Engagement’.

4. (A) PRECONDITIONS for an Audit
1) The Financial Reporting Framework (FRF) applied in the
preparation of the financial statements (FS) is
acceptable.
2) Acknowledgement received from the management that
it understands its responsibilities regarding:
i. Preparation of FS according to applicable FRF, including fair
presentation.
ii. For such internal controls as is required so that the FS are free
from misstatements due to frauds and errors.
3) Provide the auditor with:
i. Access to information. (Records, documents and other matters.)
ii. Additional Information required by the auditor.
iii. Unrestricted access to persons within the entity.
4) There has been no ‘Limitation to Scope prior to
Accepting the Audit Engagement’.

5. Limitation to Scope prior to Accepting the Audit
Engagement
If the management/TCWG impose a limitation
on the scope of the auditor’s work in terms of a
proposed terms of engagement such that the
auditor believes that the limitation will result in
the auditor disclaiming an opinion on the
financial statements, the auditor shall not
accept such a limited engagement as an audit
engagement, unless required by law or
regulation to do so.

6. (B) Agreement on Engagement Terms
(Contents of the Engagement Letter)
The auditor and the management shall agree the terms of audit
engagement and record the same in an ‘audit engagement letter’
or other suitable form of written agreement.
Any such letter should mention the following:
 Objective of Audit of FS.
 Management’s responsibility re: FS.
 Management’s responsibility re:
i. Selection of appropriate accounting policies.
ii. Consistent application of those accounting policies.
iii. Preparation of FS on going concern basis.
iv. Maintenance of adequate accounting records.
v. Written Representations by Management.
vi. Arrangements concerning involvement of internal
auditors and other staff of the client.