The audit contract: what it should contain
The audit services contract and the engagement letter fix what exactly we audit, when, and what you receive. A point-by-point look at both documents.
Two documents: the contract and the engagement letter
An audit is performed under an audit services contract. Such contracts are governed by the rules on paid services — Chapter 39 of the Civil Code of the Russian Federation (Part Two, in Russian). The terms of the engagement are also recorded in an engagement letter, as required by ISA 210 “Agreeing the Terms of Audit Engagements”.
TODO(legal): add a link to the text of ISA 210 as adopted in Russia (the Audit section of the Ministry of Finance website).
What to check in the contract
- Subject: which statements and which period — for example, the annual accounting (financial) statements for the reporting year.
- Standards: the audit is carried out under International Standards on Auditing (ISA) as adopted in Russia.
- Deliverables: the audit report and, as a rule, a management letter.
- Timing of the stages and the date the report is delivered.
- Fee and payment terms.
- Obligations of the parties: access to documents and explanations on your side, independence and audit secrecy on ours.
- Engagement partner and the team.
Rights and obligations under the law
The rights and obligations of the audit firm are set by Article 13, and those of the audited entity by Article 14 of Federal Law No. 307-FZ “On Auditing” (in Russian). Article 8 covers auditor independence and Article 9 audit secrecy.
What the contract must not contain
Promises of a “positive” opinion. The type of opinion depends only on the audit findings — a direct consequence of the auditor’s independence. See “Types of audit opinions and what they mean”.
TODO(legal): wording to be reviewed by a lawyer. TODO(content): add the specifics of the firm’s standard contract.