Engagement Letter 2/2/2020 VRTECH Limited, Dear Michelle Parker, RE: Engagement Letter

External Auditing 1
Name
Institution
1-Planning

1-1-Engagement Letter and Staffing Memo
Engagement Letter
2/2/2020
VRTECH limited,
Dear Michelle Parker,
RE: Engagement Letter
The Letter is to inform our understanding of the terms of our engagement, the nature, and
limitations of the services that we give. The contract begins on January 1 2020 and ends on
January 1 2021. Our estimated fees for the service are $70,000. If any issues arise to cause the
work to be more extensive, VRTech would be informed immediately by Mr. Adler. Any
additional services, such as preparing income tax returns, would be extra. The conduct of this
engagement as per the standards and ethical requirements of Canadian auditing standards.
Our scope of services will entail risk assessment, detection, and prevention of fraud and
error, boost the morale of accounting staff, give assurance and credibility, and ascertain tax
liability. The scope of services will also entail, showing the fair value of assets to be acquired in
case of merger, acquisition, and takeover.
Our statutory objectives will require us to certify the Company's financial position at the
end of the audit, whether financial statements portray an accurate and fair value. We will also
write a report at the end of the review to communicate our opinion arising out of our
examination. We will also give a management letter, which will highlight problems in the

internal control system, planning implementation, budgetary controls and investment
management. We will also ascertain whether the Company has kept proper books of accounts.
We will provide a list of schedules for various accounts that our staff could have prepared
by the time fieldwork starts near the beginning of January. The clients' staff will make some
schedules and analyses for the previous auditors. We have no conflict of interest.
We now accept the terms of the engagement letter
Signature
Staffing Memo
Audit staffing memo
Upon reviewing the background paper and minutes of the audit committee, there is a
need for a special audit or accounting expertise for any of the work that we have agreed to
perform. There is also a need for specialized business knowledge regarding the primary type of
business and products VRTech sells. Therefore, it has been determined the audit team should
consist of the following personnel:
1. Tax specialist
An auditor with tax expertise is necessary because VRTech has issues on taxation that needs to
be analyzed. Therefore, the tax specialist will aid in unveiling taxation issues of the client.
2. IT specialist

An auditor with technological expertise is necessary because VRTech Company is based on
virtual technology. Therefore, the auditor will aid in understanding the client’s business
environment and technicalities.
3. Arnold Wallace, Partner in charge of the audit
The audit partner will oversee the whole audit assignment, collect audit fees from the client, and
also ensure the client's representation in the entire auditing process.
4. Michael Adler, Engagement Manager
The engagement manager will work directly with Michelle Parker, the finance director. He will
also engage closely with senior staff to understand the nature of the business. He will also
identify and manage risks, produce reports highlighting problems and solutions. He will also
ensure adherence to audit methodology and Canadian standards of auditing.
1-2-Review of Minutes
Minutes indicate VRTech has weak internal controls, for example, understaffing of
accounting staff, management of the Company by one person, George Cameroon, and low
turnover of crucial accounting personnel. Other red flags entail unreasonable response of
management to audit questions, such as involvement of Michelle Parker in misstatements
uncovered in the audits.
1-3-Comparative trial balance and analytical review
1. Lawsuit