What is the primary purpose of the engagement letter?

The primary purpose of the engagement letter is to establish an agreement between the parties involved in the audit process. This letter serves as a formal document that defines the scope of the audit, the responsibilities of both the auditor and the client, and the expectations for the engagement. By clarifying these aspects, the engagement letter helps to minimize misunderstandings that may arise during the audit.

The engagement letter is crucial as it ensures that both the auditor and the client have a mutual understanding of what the audit will entail, including deliverables, timelines, and specific requirements. This agreement creates a foundation for the professional relationship and ensures that the audit is conducted according to both parties' expectations and standards.

While outlining audit fees might be a part of the engagement letter, it is not the primary purpose. Similarly, establishing a client relationship and outlining the auditing team’s qualifications are relevant, but they serve more as supportive elements of the overall agreement rather than the main focus of the engagement letter.