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The External Audit Engagement Letter is a mandatory document required before commencing statutory audit services in Nigeria. It establishes the professional relationship between a registered audit firm and a client company, as required by the Companies and Allied Matters Act 2020 and regulated by the Financial Reporting Council of Nigeria. This document outlines the scope of audit services, respective responsibilities, reporting requirements, and commercial terms. It serves as the primary reference point for the audit engagement and helps ensure compliance with Nigerian Standards on Auditing and other relevant regulations. The letter must be signed before audit work begins and is typically renewed annually for continuing engagements.

1. Letterhead and Date: Audit firm's letterhead, contact details, and date of the letter

2. Addressee: Client's name, position (typically Board of Directors or Those Charged with Governance), and address

3. Subject Line: Clear indication that this is an audit engagement letter for the specified period

4. Opening Statement: Confirmation of the appointment and purpose of the letter

5. Scope of Audit: Detailed description of the audit scope, including the financial statements to be audited and the period covered

6. Audit Objectives: Statement of the audit's objectives and the level of assurance to be provided

7. Auditor's Responsibilities: Detailed outline of the auditor's responsibilities, including reference to relevant Nigerian auditing standards

8. Management's Responsibilities: Clear statement of management's responsibilities regarding financial statements and information provision

9. Reporting Requirements: Format, timing, and nature of reports to be issued

10. Fee Arrangements: Details of audit fees, payment terms, and billing arrangements

11. Timeline: Expected timeline for the audit process and key deliverables

12. Independence Declaration: Statement confirming the audit firm's independence

13. Closing and Acknowledgment: Request for acknowledgment and space for signatures