A complete, copyable engagement letter format for the statutory audit of a company – built to SA 210 and the Companies Act, 2013. It covers the objective and scope, the reports you will issue (section 143(3), CARO 2020, the Rule 11 matters including the audit trail, and the internal financial controls opinion), the inherent-limitations warning, management responsibilities including the audit-trail software rule and MSME identification, fees under section 142, and the acknowledgment block. Replace the highlighted placeholders – or open it in the generator to toggle CARO, IFC, joint audit and Ind AS and download it in Word.
Statutory audit engagement letter format – company (FY 2025-26)
Chartered Accountants
[Firm address]
[The Board of Directors]
[Client name]
[Client address]
Dear Sirs,
We refer to our appointment as statutory auditors of the company under section 139 of the Companies Act, 2013 for the financial year [FY]. This letter records the terms on which we will carry out the audit, the nature of our respective responsibilities, and the form of the reports we expect to issue.
We will audit the financial statements of the company – comprising the balance sheet, the statement of profit and loss, the cash flow statement where applicable, and the notes – prepared in accordance with the Accounting Standards prescribed under the Companies (Accounting Standards) Rules, 2021. Our objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to express an opinion on whether they give a true and fair view in conformity with the applicable framework. The audit will be conducted in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 2013.
Based on the audit we expect to issue:
- a report to the members under section 143 of the Act, covering the matters listed in section 143(3)
- a statement on the matters specified in the Companies (Auditor’s Report) Order, 2020, as required by section 143(11)
- our views on the matters prescribed by Rule 11 of the Companies (Audit and Auditors) Rules, 2014, including whether the accounting software used to maintain the books has an audit trail (edit log) feature that operated throughout the year, was not tampered with, and has been preserved as required
- an opinion under section 143(3)(i) on the adequacy and operating effectiveness of the company’s internal financial controls with reference to the financial statements
An audit performed in accordance with the Standards on Auditing carries an unavoidable risk that some material misstatements will not be detected, even though the audit is properly planned and performed, because of the test nature of audit procedures and the inherent limitations of any system of internal control. Our report may differ in form and content from what is expected if the circumstances so require. We are also required by section 143(12) of the Act to report frauds meeting the prescribed thresholds to the Audit Committee, the Board or the Central Government, as applicable – this statutory duty overrides our general obligation of confidentiality.
- preparation of the financial statements that give a true and fair view in accordance with the Accounting Standards prescribed under the Companies (Accounting Standards) Rules, 2021, and maintenance of the books of account required by section 128, using accounting software with the audit trail feature required by the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014
- such internal control as management determines is necessary for the preparation of financial statements that are free from material misstatement, whether due to fraud or error
- giving us access to all books, records, vouchers, minutes, registers and other information relevant to the audit, any additional information we may request, and unrestricted access to persons within the company
- identification of, and disclosure to us of, all related parties, all laws and regulations applicable to the company, all suppliers registered under the MSMED Act, 2006, and all events occurring after the balance-sheet date up to the date of our report
- written representations, which we will request at the conclusion of the audit, confirming among other things that all transactions have been recorded and are reflected in the financial statements
- making the draft financial statements, duly approved, available to us in time for the audit to be completed to the agreed timetable
Our fees, as fixed under section 142 of the Act, are [fee terms], plus applicable taxes and out-of-pocket expenses. Our working papers remain our property and will be kept confidential, except where access is required by law or by the Institute of Chartered Accountants of India, the National Financial Reporting Authority, the Quality Review Board or a peer reviewer. Engagement particulars will be shared with the Institute while generating the Unique Document Identification Number on our reports. These terms will remain effective for future years unless the engagement is revised or terminated, though we may remind you of them in writing each year.
Kindly confirm your agreement with these terms by signing and returning the enclosed copy of this letter.
For [Firm name]
Chartered Accountants
Firm Registration No.: [FRN]
([Partner name])
Partner
Membership No.: [M. No.]
Signature: ______________________ Name: ______________________
Designation: __________________ Date: ______________________
What each part of this format does
| Part of the letter | Why it is there |
|---|---|
| Objective and scope | SA 210 requires the letter to state the audit objective – reasonable assurance and a true and fair opinion – and the framework: Standards on Auditing plus the Companies Act, 2013 |
| Expected reports | The section 143(3) report, the CARO 2020 statement, the Rule 11 matters including the audit-trail (edit log) statement, and the IFC opinion – with the caveat that form and content may change |
| Inherent limitations | The unavoidable risk that some material misstatements go undetected, and the section 143(12) fraud-reporting duty as a statutory exception to confidentiality |
| Management responsibilities | The SA 210 premise: preparing the statements, maintaining internal control and the audit-trail software, identifying related parties, MSME suppliers and subsequent events, and giving full access |
| Fees and working papers | Fees fixed under section 142, working-paper ownership and the peer review / NFRA / UDIN data-sharing realities of an audit in India |
| Acknowledgment | A Board-authorised director or the CFO signs and returns the duplicate – that acceptance completes the agreement of terms |
FAQs
Can I use this format exactly as printed?
It is a complete working draft, but the toggles matter: if the company is exempt from CARO or from the IFC opinion, or the audit is a joint audit, or the framework is Ind AS, paragraphs must change. The generator handles all four with a click – this static version shows the common case (CARO and IFC applicable, AS framework, sole auditor).
Who signs and who acknowledges?
The partner or proprietor signs on the firm letterhead before audit work begins. The client acknowledgment is signed by a person with authority – typically a Board-authorised director or the CFO – and the signed duplicate stays in the audit file.
What changes for a small or OPC company?
Small companies and OPCs are outside CARO and the IFC-reporting requirement, so the letter drops the CARO paragraph and swaps the IFC opinion for the exemption line. Use the generator with CARO and IFC set to No – exempt.
Does the letter cover the audit-trail rule?
Yes – twice. The expected-reports list includes the Rule 11(g) audit-trail statement, and the management-responsibilities list makes maintaining accounting software with an operating, tamper-proof, preserved edit log the company’s responsibility.
Do I need a fresh letter every year?
Not necessarily – for recurring audits SA 210 permits continuing on existing terms with an annual reassessment. The generator includes a short reminder-of-terms letter for exactly that; a fresh full letter is indicated when management, ownership, the framework or the terms change.
Is this the ICAI illustrative letter?
No. The wording is original, drafted to satisfy SA 210 and its Implementation Guide – nothing is reproduced from ICAI publications, so you can adapt and use it freely with your own review.
Method notes: this format is generated from the same drafting engine as the linked generator, against the standards and Council requirements as they stand in July 2026. All wording is original; nothing is reproduced from ICAI publications. Replace every highlighted placeholder, place the letter on the proper letterhead and have the signing person review each paragraph against the facts of the engagement. Reviewed by a practising CA; updated July 2026.