a) An engagement letter is a mandatory requirement which sets out the legal relationship between a professional firm and its client.
It should be provided before any work is undertaken as it sets out key information, including the scope of the contract.

b) An engagement letter should include details of the following:
i. The objective and scope of the audit;
ii. The responsibilities of the auditor;
iii. The responsibilities of management;
iv. Identification of the underlying financial reporting framework;
v. Reference to the expected form and content of any reports to be issued;
i. Any restriction of the auditor‟s liability when such possibility exists;
vii. The expectation that management will provide written representation;
viii. The basis on which fees are computed and any billing arrangements;
ix. A request for management to acknowledge receipt of the engagement letter and to agree to its terms; x. Arrangements concerning the involvement of other auditors and
experts; and
xi. The planning and performance of the audit

c) Advantages of an engagement letter include:
i. It helps to dissect responsibilities in the sense that the management is responsible for the preparation of financial statements, whereas the auditor is responsible to ensure that these financial statements have not been misstated;
ii. It prevents risk of misunderstandings with client;
ii. It makes the client better informed and educated on the nature and scope of the audit;
iv. The information contained in the engagement letter assists in planning the audit; and
v. It serves as a means of avoiding legal liability for claims that auditors did not perform the assignment as promised.

d) Five requirements of ISA 210 with respect to
the preconditions for accepting appointment as an auditor include:
i. Establishing if the financial reporting framework to be used in the preparation of the financial statements is acceptable;
ii. Obtaining the agreement of management that it acknowledges and understands its responsibility for the preparation of the financial statements and internal controls to ensure that the financial statements are not materially misstated;
iii. Ensuring no limitation of scope is imposed by management that would disable auditor‟s opinion;
iv. Providing the auditor with all relevant and requested information and unrestricted access to all personnel by management or those charged with governance; and
v. Ensuring that management agrees to their responsibilities.