The Chief Executive Officer
ChildLife Foundation
1st Floor, Najeeb Center, 172-B Shahrah-e-Qaideen
Block 2 PECHS
Karachi
November __, 202
ASR ____
Dear Sir
ENGAGEMENT LETTER IN RESPECT OF AUDIT OF
THE GRANT RECEIVED FROM GOVERNMENT OF SINDH
FOR THE PERIOD FROM JULY 1, 2020 TO JUNE 30, 2021
The purpose of this letter is to confirm our understanding of our mutual responsibilities arising as a
result of our engagement for the captioned assignment. These terms will remain effective until
amended, in writing, with the agreement of both parties.
2.
Basic objective of the engagement
We will conduct the audit of the financial statements for the period from July 1, 2020 to June
30, 2021. Grant received in quarterly tranches form Government of Sindh (hereinafter referred
to as “the Grant”) in accordance with the requirements of International Standards on Auditing
800 - Special Considerations—Audits of Financial Statements prepared in accordance with
Special Purpose Frameworks. Upon completion of the audit, we will provide you with our audit
report on the financial information together with a report on internal controls over financial
reporting, If applicable.
Because of the inherent limitations of an assurance engagement, together with the inherent
limitations of internal control, there is an unavoidable risk that some material misstatements
may not be detected, even though the assurance engagement is properly planned and
performed in accordance with the requirements of applicable standards.
3.
Scope of the audit
The objective of the audit is the expression of an opinion on the financial statements of
the Grant for the period from July 1, 2020 to June 30, 2021. We will be required to conduct
an audit in accordance with International Standards on Auditing and Assurance Standard
Board of the International Federation of Accountants with special reference to ISA 800 Special Considerations—Audits of Financial Statements prepared in accordance with
Special Purpose Frameworks prepared by the management. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.
Internal control systems, no matter how well designed and operated, are affected by
inherent limitations. These include the possibility of poor judgment in decision-making,
human error, control processes being deliberately circumvented by employees and
others, management overriding controls and the occurrence of unforeseeable
circumstances.
Because of the inherent limitations of an audit, together with the inherent limitations of
internal control, there is an unavoidable risk that some material misstatements may not
be detected, even though the audit is properly planned and performed in accordance with
the requirements of the ISAs as applicable in Pakistan.
Upon completion of the audit, we will provide you with our audit report on the financial
information prepared in accordance with the Special Purpose Framework.
4.
General responsibilities of the management with respect to the financial information
Our audit will be conducted on the basis that the management acknowledges and
understands that it has the responsibility:
(i)
For the preparation and fair presentation of the financial statements;
(ii)
for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to
fraud or error; and
(iii)
to provide us with:
(a)
Access to all information of which management is aware that is relevant to the
preparation of the financial statements such as original records, documentation and other
matters;
(b)
additional information that we may request from management for the purpose of the
audit; and
(c)
unrestricted access to persons within the entity from whom we determine it
necessary to obtain audit evidence.
Further, we understand that all detailed accounting schedules in support of each component
of the income and expenditure account along with the draft financial statement prepared in
accordance with Special Purpose Framework complying with the applicable disclosure and
presentation requirements will be prepared by the management.
5.
Responsibility for preventing and detecting fraud and errors and non-compliance with
laws and regulations
Management is responsible for safeguarding the Grant’s assets and for the prevention
and detection of fraud and error. Management is also responsible for identifying and
ensuring that the activities of the Grant comply with the laws and regulations applicable
to its activities. We will design our audit to obtain reasonable, but not absolute, assurance
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of detecting errors or fraud that would have a material effect on the financial information
as well as other illegal acts having a direct and material effect on the financial information.
Our engagement will not include a detailed audit of transactions, such as would be
necessary to disclose errors or fraud that did not cause a material misstatement of the
financial information. It is important to recognise that there are inherent limitations in the
auditing process. Audits are based on the concept of selective testing of the data
underlying the financial information, which involves judgment regarding the areas to be
tested and the nature, timing, extent and results of the tests to be performed. Audits are,
therefore, subject to the limitation that error, fraud or other illegal acts having a direct and
material impact on the financial information, if they exist, may not be detected. Because
of the characteristics of fraud, particularly those involving concealment through collusion
and falsified documentation, an audit designed and executed in accordance with ISAs as
applicable in Pakistan might not detect a material fraud. Further, while effective internal
control reduces the likelihood that errors, fraud or other illegal acts will occur and remain
undetected, it does not eliminate that possibility. For these reasons we cannot ensure
that errors, fraud or other illegal acts, if present, will be detected.
6.
Identifying and reporting internal controls deficiencies
Our audit is not designed to identify all significant deficiencies in the management’s
system of internal controls over financial reporting. We shall endeavour to perform our
work to enable us to detect significant control weaknesses and perform additional work
directed towards identification of consequent fraud or other irregularities. However, our
procedures alone, even when carried out with due professional care, do not guarantee
identification of fraud relating to Grant activities or financial reporting thereof. In making
our risk assessments, we consider internal control relevant to the entity’s preparation of
the financial information in order to design audit procedures that are appropriate in the
circumstances. Our review of internal financial control systems is performed only to the
extent required to express an opinion on the Grant’s financial information. This
consideration will not be sufficient to enable us to provide assurance on the effectiveness
of internal control over financial reporting.
However, we shall communicate in writing any deficiency in internal control relevant to
the audit of the financial information of the Grant that we have identified during the audit,
in the form of a report on internal control over financial reporting. Any such report will not
be provided to a third party without our prior written consent. Such consent will be granted
on the basis that such reports are not prepared for the use or benefit of anyone other
than ChildLife Foundation.
We shall only report the deficiencies in internal control relevant to the audit of the financial
information of the Grant and our work will not involve evaluating or validating internal
controls of ChildLife Foundation and its operations other than the Grant.
7.
Responsibility for communicating information about facts affecting financial
information after signing of the audit report
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The management will inform us of facts that may affect the financial information and of
which management may become aware during the period from the date of the audit
report to the date the financial information are issued.
8.
Third party users of our opinion
Our audit opinion is intended for the benefit of only those to whom it is addressed. The
audit engagement will not be planned or conducted in contemplation of reliance by any
other third party or with respect to any specific transaction other than ChildLife
Foundation. Therefore, items of possible interest to any other third party will not be
specifically addressed and matters may exist that would be assessed differently by a
third party, possibly in connection with a specific transaction.
9.
Electronic distribution of our opinion
If ChildLife Foundation intends to publish or reproduce its financial information
electronically (e.g. on an Internet Web Site), then the following note should be placed as
a foot note to our report:
“In case of any discrepancy on ChildLife Foundation website, the auditors shall only be
responsible in respect of the information contained in the hard copies of the audited
financial information available at ChildLife Foundation registered office.”
10.
Confidentiality and data protection
All data relating specifically to ChildLife Foundation activities related to the Grant and any other
information which reasonably should be understood to be confidential to ChildLife Foundation
are confidential information of ChildLife Foundation (‘Confidential Information’). We will use the
‘Confidential Information’ only in relation to the provision of services provided by us to ChildLife
Foundation (‘the Services’) and will not disclose such ‘Confidential Information’ to any third
party without ChildLife Foundation’s prior written consent save as provided in this letter. We
will not be obligated to treat as confidential any information disclosed by ChildLife Foundation
which: (i) is rightfully known to us prior to its disclosure by ChildLife Foundation; (ii) is released
by ChildLife Foundation to any other person or entity without restriction; (iii) is independently
developed by us without any use of or reliance on ‘Confidential Information’ ; (iv) is in or enters
the public domain without breach of this confidentiality obligation; and / or (v) may be lawfully
obtained by us from any third party.
PwC Firms (A “PwC Firm” means a member of the PricewaterhouseCoopers global network
of firms, each of which is a separate and independent legal entity) may share ‘Confidential
Information’ and personal data (as collected during the engagement) where necessary with
contractors, subcontractors and agents involved in the provision of services, such as in the
context of international assignments or audits involving multiple PwC Firms.
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We may disclose with the prior written consent of ChildLife Foundation ‘Confidential
Information’ and personal data including information subject to privilege to (i) third parties such
as professional advisers; and (ii) national and international regulatory bodies e.g. the Institute
of Chartered Accountants of Pakistan, the Securities and Exchange Commission of Pakistan,
the State Bank of Pakistan etc., or courts as may be required by any law, statute, rule or
regulation, professional standards including any foreign law, statute, rule or regulation as long
as it is determined by us to be applicable to us. We may also share ‘Confidential Information’
and personal data with other PwC Firms for independence, risk management and quality
review purposes. ‘Confidential Information’ and personal data relating to ChildLife Foundation’s
activities for the Grant such as employees, contractors and other individuals may also be
transferred for various business purposes including business development, relationship
management, account management, internal financial reporting, provision of IT services
(including among others storage, hosting, maintenance, support) and outsourcing services,
both to PwC Firms and to service providers we use.
11.
Ownership of and access to audit files
The working papers and files for this engagement created by us during the course of the audit,
including electronic documents and files, are the sole property of A. F. Ferguson & Co.
Our working paper files are retained for a period of only six years, after which these are
destroyed. This is done to manage the physical bulk of files and documentation, and reduce
the cost of storage. However, should you require us to maintain our working papers beyond
the above period; we shall make a charge in respect thereof.
12.
Process for assessing client satisfaction with our services
It is our desire to provide you at all times with a high quality service to meet your needs.
If at any time you would like to discuss with us how our service to you could be improved
or if you are dissatisfied with any aspect of our services, please raise the matter
immediately with the partner responsible for that aspect of our services to you. In this way we
are able to ensure that your concerns are dealt with carefully and promptly.
13.
Internet communication
During the engagement we may from time to time communicate with you electronically.
However, as you are aware, the electronic transmission of information cannot be
guaranteed to be secured or error free and such information could be intercepted,
corrupted, lost, destroyed, arrive late or be incomplete or otherwise be adversely affected
or unsafe to use. Accordingly, while we will use reasonable procedures to check for the
then most commonly known viruses before sending information electronically, we shall
not have any liability to you arising from or in connection with the electronic
communication of information to you.
14.
Fees and expenses
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Our fee for audit services, which will be billed as work progresses, shall be Rs. 250,000. Out
of pocket expenses, including any travelling etc., will be billed separately in accordance with
our normal practice. Any government taxes or levies applicable at present or which may
become applicable in future shall be charged separately. Invoices rendered are due and
payable upon receipt. Fee for other services shall be charged separately on a similar basis.
15.
Other services to be subject of separate contracts
Any additional services that you may request and that we agree to provide will be the subject
of separate written arrangements.
16.
Independence
Independence rules impose restrictions on our partners and audit team members
subsequently being employed by an audit client. You should be aware that if ChildLife
Foundation appoints an individual, who was a partner of the Firm or a member of the
audit team within one year period prior to the commencement of the audit in progress, in
a position which could influence ChildLife Foundation’s accounting policies related to the
Grant or the content of its financial information, then this may create a threat to our
independence so significant that we may be required to resign our audit appointment.
ChildLife Foundation will inform us if any such appointments are made.
17.
Applicable law and governing jurisdiction
The contract formed by this engagement letter, when accepted, shall be governed by,
and construed in accordance with the laws of Pakistan and it is hereby irrevocably agreed
and accepted that the courts of Pakistan shall have exclusive jurisdiction to settle any
claim, difference or dispute.
18.
Form and content of our report
The form of our audit report will be in accordance with Audit Technical Release (ATR) –
17 issued by the Institute of Chartered Accountants of Pakistan and ISAs as applicable
in Pakistan. The form and content of our report may need to be modified in the light of
our audit findings.
19.
Indemnification and liabilities
ChildLife Foundation by executing this letter agree to indemnify and hold harmless AFF from
all third party claims, damages, liabilities and costs other than those resulting from our
negligence, default, breach of duty, breach of trust, willful misconduct or dishonesty. If any
claim, action or proceeding against us arises with respect to which we are entitled to indemnity
hereunder, we shall promptly notify ChildLife Foundation which shall be entitled to retain
counsel (who shall be satisfactory to us) to defend such action or proceeding and ChildLife
Foundation shall be responsible to pay the costs, fees and disbursements of such defiance.
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No admission of liability and/or settlement of any action, claim or proceeding shall be made on
behalf of or bind us without our written consent.
In no event shall AFF be liable to ChildLife Foundation whether the claim be in tort, contract or
otherwise, for an amount in excess of the professional fee paid to us for the engagement other
than for claims resulting from our willful misconduct or dishonesty. In no event shall AFF be
liable to ChildLife Foundation whether a claim be in tort, contract or otherwise for any
consequential, indirect, lost profit or similar damages, or failure to realise expected savings,
relating to our services provided under this engagement contract.
20.
Name of the engagement partner
The Firm’s assurance partner responsible for this engagement is Mr.Shahbaz Akbar.
Please acknowledge receipt of this letter and your agreement to the terms of our engagement as set
out here in the signing the enclosed copy of the letter in the space provided. Kindly return one copy
to our offices and retain one copy for your records.
Yours truly
encl
The terms of this engagement are accepted by _______________________ on behalf of
ChildLife Foundation to represent that he is authorised to accept those terms on its behalf.
Signed:
Dated:
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