ISA 210 Agreeing the Terms of Audit Engagements requires auditors to agree the terms of an

engagement with those charged with governance and formalise these in an engagement letter.

Required:

(a) Identify and explain TWO factors which would indicate that an engagement letter for an existing audit client should be revised. (2 marks)

(b) List SIX matters which should be included within an audit engagement letter. (3 marks)

(c) Your audit firm has just won a new audit client, Milky Way Technologies Co (Milky Way), and you have been asked by the audit engagement partner to gain an understanding about the new client as part of the planning process.

Required:

Identify FIVE sources of information relevant to gaining an understanding of Milky Way Technologies Co and describe how this information will be used by the auditor. (5 marks)