INSTITUT DES REVISEURS D’ENTREPRISES
(adopted by the IRE Council on December 19, 2013)
STANDARD ENGAGEMENT LETTER
[to be adapted according to the type of engagement]
[To the Board of Directors / the Shareholders / the Partners / the Management]
[Company’s name]
[Company’s address]
Luxembourg, [date]
Dear Sirs,
The purpose of this letter is to set out the general terms and conditions governing the execution of our
engagement.
1. Scope and terms of our engagement
We have been requested [appointed] by the Annual General Meeting [Board of Directors / Partners /
Management] of [Company’s name] (“the Company”) to act as Réviseurs d’Entreprises agréé for the
purposes of the following engagement(s):
•
statutory [contractual] audit of the annual accounts [consolidated accounts] of the Company for the
year ending [date].
•
statutory [contractual] audit of the financial statements [consolidated financial statements] of the
Company for the year ending [date].
[If the contractual audit is not performed according to the ISAs, the Réviseur d’Entreprises Agréé shall add a paragraph in the engagement letter to
clarify the auditing standards applied. Similarly, if the accounting standards adopted for the preparation and presentation of the annual accounts /
financial statements differ from the accounting standards in force in Luxembourg, the Réviseur d’Entreprises Agréé shall add a paragraph in the
engagement letter to clarify the accounting standards applied.]
[The Réviseur d’Entreprises Agréé may have responsibilities to report separately on the Company’s internal control. In such circumstances, the
Réviseur d’Entreprises Agréé reports on that responsibility as required. The reference in the general terms and conditions for the execution of
assignments carried out by Réviseurs d’Entreprises Agréés to the fact that the Réviseur d’Entreprises Agréé’s consideration of internal control is
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control may not be appropriate in such circumstances. The
Réviseur d’Entreprises Agréé shall add a paragraph in the engagement letter to this effect.]
[Our engagement also includes the audit of the annual accounts [financial statements] of the foreign
branches of the Company.]
[In addition, you have asked us, further to the instructions from your parent company, to carry out an
audit [a review] as of [date] of the consolidation package prepared for the group reporting purposes
and to issue a report thereon.]
To facilitate our audit work, we shall request access to all documents or statements required to be
appended to the annual accounts [financial statements / consolidated financial statements /
consolidated accounts or other to be specified]. We are also entitled to be notified of and to attend all
Shareholders general meetings of the Company and, where applicable, meetings of the Board of
Directors.
2. Communication of audit matters to those charged with governance
We will agree with you the basis and timing of communications in order to communicate any matters
raised during our audit that we believe to be both important and relevant to those charged with
governance.
The issues that were raised during our audit will be communicated to the Board of Directors
[Management / Partners / Board of Managers / Audit Committee] at the next date in the agreed
timetable of meetings.
If, however, we discover any matter whether arising as a result of fraud, error or non-compliance with
laws and regulations, we will inform the Board of Directors [Management / Partners / Board of
Managers / Audit Committee] earlier than planned unless we are legally prohibited from making such
communications.
The content of such communications will depend on the circumstances, but may include areas such
as: material weaknesses in the accounting and internal control systems identified during the audit,
audit adjustments, disagreements on selection or on changes in the significant accounting policies and
practices, material subsequent events, going concern issues, or any other matters we consider
significant which arose during the course of our audit work.
We will also inform you in writing of any material weaknesses, if any, in the internal control relevant to
the preparation of the financial information that we become aware of while performing the audit of the
annual accounts [financial statements / consolidated financial statements / consolidated accounts]. All
the issues raised in our letter will be discussed with Management [Board of Managers / Audit
Committee] prior to issuance. Our letter will be written only for the information of the Board of Directors
[Management / Partners / Board of Managers / Audit Committee] and should not be used for any other
purpose. We will not accept any liability for the use of this letter in any way other than specified above.
Our communications are intended solely for the information of the Board of Directors [Management /
Partners / Board of Managers / Audit Committee] and may not be disclosed to any third party without
our prior written consent. Such consent will be granted only on the basis that such communications
are not prepared for the needs of third parties but only for the purpose of the Board of Directors
[Management / Partners / Board of Managers / Audit Committee] to whom they are addressed.
Therefore, we are not committed or liable to third parties.
3. Audit report
[IFRS]
Our audit report to the Shareholders [Management / Partners / Board of Managers] of the Company
will state whether, in our opinion, the financial statements [consolidated financial statements] give a
true and fair view of the financial position of the Company as of [date], and of its financial performance
and its cash flows for the year then ended [or “for the period from (date) to (date)“] in accordance with
International Financial Reporting Standards [as adopted by the European Union] and whether the
[consolidated] management [annual] report, which is the responsibility of the Board of Directors
[Management / Board of Managers], is consistent with the financial statements [consolidated financial
statements].
[Luxembourg GAAP]
Our audit report to the Shareholders [Management / Partners / Board of Managers] of the Company
will state whether, in our opinion, the annual accounts [consolidated accounts] give a true and fair view
of the financial position of the Company as of [date], and of the results of its operations for the year
then ended [or “for the period from (date) to (date)“] in accordance with Luxembourg legal and
regulatory requirements relating to the preparation of the annual accounts [consolidated accounts] and
whether the [consolidated] management [annual] report, which is the responsibility of the Board of
Directors [Management / Board of Managers], is consistent with the annual accounts [consolidated
accounts].
The form and content of our report may need to be amended in the light of our audit findings.
We shall accept liability only for the observations and opinions stated in our final written report issued
on completion of our audit and which indicates the conclusions drawn from our work.
4. Professional secrecy of the Réviseur d’Entreprises Agréé
Without prejudice of the provisions of the general terms and conditions applicable to the execution of
assignments carried out by Réviseurs d’Entreprises, should the need arise, as part of our audit
engagement and with your prior consent, to deliver data or information to you by electronic means, our
duty of confidentiality shall be limited to the implementation of appropriate security measures.
5. Written representations
In accordance with International Standards on Auditing, we shall request you to confirm in writing all
representations that have been made to us during the course of our audit.
This letter of representation must be received by us prior to the issuance of our audit report on the
annual accounts [financial statements / consolidated financial statements / consolidated accounts].
6. FEES
«Free text»
[Our fees, which will be billed as work progresses, are based on the time required by the individuals
assigned to the engagement plus out-of-pocket expenses. Individual hourly rates vary according to the
degree of responsibility involved and the experience required. Should any additional costs arise during
the course of our engagement, we will discuss and agree these with you. We estimate that our audit
fee will be approximately EUR____________ excluding VAT and out of pocket expenses.]
7. Duration of appointment
We have been appointed as Réviseur d’Entreprises Agréé for a term of [number of years] year[s],
unless terminated on the grounds of gross negligence or of matters relating to compliance with the
Réviseur d’Entreprises Agréé Code of Ethics as adopted for Luxembourg by the Commission de
Surveillance du Secteur Financier [or, where applicable, at the request of the (name of supervisory
body)]. This appointment will be deemed to be automatically renewed, on expiry, unless another
Réviseur d’Entreprises Agréé is expressly appointed by resolution of the Board of Directors
[Management / Partners / Board of Managers].
8.
Acceptance
We would be grateful if you could kindly confirm your agreement to the contents of this engagement
letter by signing and returning to us one copy of this letter and one copy of the enclosed general terms
and conditions applicable to the execution of assignments carried out by Réviseurs d’Entreprises
which form an integral part of the present engagement letter.
It should be noted that these general terms and conditions provided to you in English are a free
translation of the French original version which is considered the legally binding document.
We thank you for the trust you have placed in us and we look forward working with you.
Yours faithfully,
Réviseur d’Entreprises Agréé
On behalf of [Company’s name]
We confirm our acceptance of the terms of this engagement letter and of the enclosed general terms
and conditions for the execution of assignments carried out by Luxembourg Réviseurs d’Entreprises.
Name:
Date:
Title:
Signature:
ANNEXE I – INSURANCE
In the context of a statutory audit of an insurance or reinsurance company, certain paragraphs will be
amended as follows:
STANDARD ENGAGEMENT LETTER
[To be adapted according to the type of engagement]
1.
Scope and terms of our engagement
We have been requested [appointed] by the Annual General Meeting [to be adapted if required by the
legislation, including the legal status of the audited entity] of [Company’s name] (“the Company”) to act
as Réviseurs d’Entreprises Agréé for the purposes of the following engagement(s):
•
statutory [contractual] audit of the annual accounts [consolidated accounts] of the Company for the
year ending [date].
•
statutory [contractual] audit of the financial statements [consolidated financial statements] of the
Company for the year ending [date].
[Our engagement also includes the audit of the annual accounts [financial statements] of the foreign
branches of the Company.]
[In addition, you have asked us, further to the instructions from your parent company, to carry out an
audit [a review] as of [date] of the consolidation package prepared for the group reporting purposes
and to issue a report thereon.]
We will issue a “Rapport distinct” in accordance with instructions issued by the “Commissariat aux
Assurances”.
A copy of the “Rapport distinct” will be sent by us to the “Commissariat aux Assurances”.
Our “Rapport distinct” will be prepared solely for the purposes of the “Commissariat aux Assurances”
and its contents shall not be published, use as a reference or distributed to third parties and must not
be used by third parties. We do not accept any liability in relation to any other party to which the
“Rapport distinct” may have been disclosed or submitted.
ANNEXE II – OPC
In the context of a statutory audit of an UCITS, the Réviseur d’Entreprises Agréé will consider the
following:
The aim of this Annex is to draw the attention of the Réviseur d’Entreprises Agréé on the specifics to
consider when establishing the engagement letter in the context of a statutory audit an Undertakings
for Collective Investment in Transferable Securities (hereafter "UCITS"). The specifics are as follows:
1. The procedures to be performed by the Réviseur d’Entreprises Agréé as provided by the
CSSF Circular 2002/81 on the guidelines concerning the task of auditors of undertakings for
collective investment and other circulars in force on the subject issued by the CSSF. To this
end, the engagement letter should include a provision enabling the Réviseur d’Entreprises
Agréé to have access to internal control report as provided by the CSSF Circular 2002/81 and
possibly prepared by another Réviseur d’Entreprises Agréé.
2. The procedures to be performed by the Réviseur d’Entreprises Agréé as provided by the
CSSF Circular 2002/77 on the protection of investors in case of NAV calculation error and
compensation of the consequences resulting from non-compliance with the investment rules
applicable to undertakings for collective investment.
3. Confirmation as representation letters must be signed and obtained in application of CSSF
circulars 2002/77 and 2002/81.
4. The inclusion of a warning that the audit procedures do not cover the following points:
•
marketing materials and / or other public information with the exception of the annual report will not
be subject of the audit, which will be documented in a report signed by the Réviseur d’Entreprises
Agréé;
•
additional tax information in connection with the distribution of the UCITS outside the Grand Duchy
of Luxembourg, including information relating to the application of the Council Directive of the
European Union on taxation of savings income in the form of interest payments, the calculation of
taxable income for German and Austrian investors, etc. ;
•
compliance with the UCITS regulations for in countries where the UCITS is distributed.
5. As part of the statutory audit of a “FCP”, the engagements letter should refer to "unitholders"
and not "shareholders". It should be addressed to the Board of Directors of the Management
Company.
6. The inclusion of a warning in the event that the annual report is translated into one or more
languages other than the language of reference of the UCITS; it is the responsibility of the
Board of Directors to establish an accurate translation of the annual report and the audit
report. The translation of the annual report should explicitly state that only the version in the
language reference has been audited by the Réviseur d’Entreprises Agréé and that the audit
report refers only to this version.
7. In case an shortened or modified version of the financial statements is available, the
engagement letter shall provide that the UCITS Management will (a) include a warning that
the opinion of the Réviseur d’Entreprises Agréé refers only to the complete set of financial
statements or (b) request the issuance of a specific opinion on this shortened or modified
version of the financial statements.
8. The inclusion of a paragraph recalling the obligations of the Réviseur d’Entreprises Agréé in
accordance with the applicable provisions of the Law of 17 December 2010 on undertakings
for collective investment, as subsequently amended, and of the Law of 13 February 2007 on
specialised investment funds, as subsequently amended.
9. Given the particularities of the operation of a UCITS for which the change of beneficial owners is
extremely common (potentially every subscriptions / redemptions), the paragraph of the general
terms and conditions for the execution of assignments carried out by Luxembourg Réviseurs
d’Entreprises general terms in connection with the legislation relating to combating money
laundering and combating the financing of terrorism should be supplemented by a paragraph in the
standard engagement letter stating that the Réviseur d’Entreprises Agréé will not be notified of
each modification of the beneficial owners but will be granted access to these information.