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	Table of Contents
p. 104 of 203 BACK | NEXT Foreword 1. Introduction to the Guidelines 2. User Instructions 3. Preparing and Appraising Investment Project 4. Financial Management of Executing Agencies 5. Reporting and Auditing 5.1. Financial Reporting and Auditing Overview 5.2. Accounting Standards and Policies 5.3. Financial Reporting 5.4. Auditing Standards and Auditor Engagement 5.4.1 Introduction 5.4.2. ADB Requirements 5.4.3. Auditing Procedures 5.4.4. Auditor Selection and Appointment 5.4.5. Issues in Auditor Selection 5.4.6. Selecting Auditors 5.4.7. Terms of Reference for an Auditor 5.4.8. Contract or Engagement Letter of Auditor 5.4.9. International Standards on Auditing 5.4.10. Government Auditors 5.5. Reviewing Financial Reports 5.6. Reviewing Auditors' Reports 6. Financial Institutions 7. Knowledge Management

Financial Management and Analysis of Projects : 5. Reporting and Auditing : 5.4. Auditing Standards and Auditor Engagement

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5.4.8. Contract or Engagement Letter of Auditor

5.4.8.1. The use of a Contract or Audit Engagement Letter is recommended. Where a formal contract is used, it is normally prepared by the PIU. A simple engagement letter is frequently used, often prepared by the auditor. The contract or letter sets out the responsibilities of the auditor and should include, but not be limited to:

• Confirmation of acceptance of the appointment including reference to the TOR;
• Borrowers' responsibilities, particularly the preparation of financial information (the financial statements);
• Provision of access to whatever premises, records, documentation (including Staff RRP, legal agreements, etc.) and any other information the auditor may request in connection with the audit;
• Form of audit reports;
• Arrangements regarding the involvement of internal auditors and of any other external auditors (such as the government auditor);
• Expected date of issuance of the audited financial statements, etc.; and
• Basis on which fees are computed and any billing arrangements.

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