Review Engagement Letter Template for South Africa

A Review Engagement Letter is your formal agreement with an independent reviewer or audit firm for conducting a limited assurance engagement on your financial statements. Under South African law, this document is mandatory before any review procedures begin and serves as the foundation for your professional relationship with the reviewer.

When do you need this document?

You need a Review Engagement Letter when your company requires limited assurance on financial statements but doesn't need a full audit. This typically applies to private companies not subject to mandatory audit requirements under the Companies Act 71 of 2008, subsidiaries of listed companies requiring group reporting, or entities where stakeholders request some level of assurance without the cost and complexity of a full audit. The document is also essential for non-profit organisations, close corporations, and companies seeking bank financing where lenders require reviewed financial statements.

Key legal considerations

Your Review Engagement Letter must clearly define the scope and limitations of the review engagement, emphasising that it provides limited assurance rather than reasonable assurance. The document should specify that the reviewer will not express an audit opinion and that the review may not detect all material misstatements. Key clauses must address the responsibilities of both parties, including management's responsibility for preparing financial statements and the reviewer's obligation to perform procedures in accordance with ISRE 2400. The letter should also cover confidentiality provisions, access to records and personnel, timing of the engagement, and fee arrangements. Independence requirements under the IRBA Code of Professional Conduct must be acknowledged, and any threats to independence should be addressed.

Legal requirements in South Africa

Under South African law, your Review Engagement Letter must comply with the Companies Act 71 of 2008, which governs financial reporting requirements, and the Auditing Profession Act 26 of 2005, which regulates the auditing profession. The engagement must be conducted by a registered auditor or eligible reviewer registered with the Independent Regulatory Board for Auditors (IRBA). The letter must reference compliance with International Standard on Review Engagements (ISRE) 2400 (Revised) and the IRBA Code of Professional Conduct. Consumer Protection Act 68 of 2008 requirements may apply, particularly regarding service agreement terms and consumer rights. If personal information will be processed during the engagement, the letter should address Protection of Personal Information Act (POPIA) compliance. The document must be signed by authorised representatives of both the reviewer and the client company, with the client's signature authority properly documented in board resolutions or delegation of authority documents.