Understanding the Importance of an Engagement Letter in Auditing

The video explains the engagement letter, a legal document between an auditor and a client, outlining the audit's scope, responsibilities, and fees. It prevents scope creep and liability issues. Large firms have procedures to ensure these letters are obtained, while smaller firms should be diligent in securing them.

What are the potential issues that the engagement letter helps to prevent?

How do larger firms differ from smaller firms regarding engagement letters?