Sample Audit Planning letter

The Board of Directors

XYZ Limited

30 Pembroke Street

Dublin

Date

Re: Audit planning letter

Dear Sirs

We are writing in Thesis is with the audit due to start on Further to our meeting we now set out below some matters in relation to our audit planning.At this point we aim to ensure that there is a mutual understanding of the audit and the respective responsibilities of the auditors and the directors

In addition to providing our formal audit report on your financial statements, we will communicate in our audit findings letter those matters, which we believe to be relevant to the directors that come to our attention as a result of the performance of our audit of the financial statements. 

Independence and objectivity

In accordance with the Auditing Practices Board Ethical Standards we as auditors must ensure that our independence and objectivity is maintained at all times. 

The following issues are potential threats to our independence: 

a.

b.

c.

We have introduced the following safeguards to counter these potential threats. 

a.

b.

c.

We confirm that, in our professional judgement and having regard to the safeguards in place, the firm is independent within the meaning of the Auditing Practices Board’s Ethical Standards and the objectivity of the audit engagement partner and staff is not impaired. Therefore, we are pleased to proceed in accordance with our appointment. 

Nature and scope of the audit

We set out below an outline of the nature and scope, including where relevant, any limitations thereon, of the work we propose to undertake and the form of the report we expect to make

We have a duty to form an opinion on the financial statements at the end of the audit. We must give an opinion on whether the financial statements give a true and fair view at the year-end, whether the financial statements have been properly prepared in accordance with the Companies Acts 1963-2005, we must also state whether all the information and explanations which we consider necessary for the purpose of the audit have been obtained, whether proper books of account have been kept by the company and whether the information given in the Directors’ Report is consistent with the financial statements. We must also state whether the financial situation under Section 40(1) of the Companies (Amendment) Act 1983 exists (i.e. the net assets of the company are less than half of the called up share capital) and this would require the convening of an extraordinary general meeting.

We will express an unqualified opinion when the financial statements give a true and fair view in accordance with the financial reporting framework. Any modification to this unqualified audit opinion will be expressed in our auditor’s report and in the audit findings letter.

We will conduct our audit in accordance with the International  (UK and Ireland) issued by the Auditing Practices Board. An audit includes an examination on a test basis of evidence relevant to the amounts and disclosures in the financial statements. 

We will also document the internal controls and the systems of your company. We will review internal and external operational, financial, compliance and other risks facing the company, which might affect the financial statements, including the likelihood of those risks materialising and how they are managed.

We will also document and review the control environment within the company, including the attitude of management to controls and whether management have a process for keeping under review the effectiveness of the system of internal control and, where a review of the effectiveness of internal control has been carried out and the results of that review.

We will also review the actions that the directors’ plan to take in response to matters such as developments in law, accounting standards and other developments relevant to the Company’s financial statements.

Findings from the audit

At the end of the audit we will draft an audit findings letter for the attention of the directors’ of the company.

The audit findings letter will include our views and comments on the following:

• Weaknesses in the internal control and accounting systems

• Significant audit risks that have an impact on the audit report

• Unadjusted misstatements

• VAT/PAYE issues

• Qualitative aspects of the company’s accounting practices and financial reporting

• Matters specifically required by other ISAs (UK and Ireland) to be communicated to the directors’

• Any other audit matters of governance interest. 

This letter was prepared for sole use of the company, the content must not be disclosed to any third party, without our prior written consent and we assume no responsibility to any other person.

Yours faithfully

Auditors