Special purpose engagement letter
This query is : Resolved
09 December 2016
What is the format for an engagement letter for issue of special purpose certificates (certificates in relation to an initial public offer) by the auditor?
12 December 2016
For the various audit engagement letters, you can kindly refer to SA 210 - Agreeing the terms of audit engagements. The auditing standard has different audit engagement letters.
12 December 2016
Madam, however the standard specifies general purpose engagements. the engagement for issue of certificates does not involve any audit.
12 December 2016
As a general practice, the certification is given to the auditor of the company. Thus, in the paragraph of scope of work, certification service is also included.
12 December 2016
Madam, what about the guidance note on reports and certificates for special purpose? can that GN be applied in this situation?
25 July 2025
For a **Special Purpose Engagement Letter** for issuing certificates related to an Initial Public Offer (IPO), here’s a concise outline and sample format you can customize. This kind of engagement usually involves **certification work** rather than a full audit, so the letter should clearly define scope, responsibilities, limitations, and terms.
---
### Key Components of a Special Purpose Engagement Letter for IPO Certificates:
1. **Introduction**
Identify parties (auditor and client), date, and subject (issuance of certificates for IPO).
2. **Scope of Work**
* Specify the exact nature of the certificate(s) to be issued.
* Clarify that it is limited to certification as per requirements for IPO (e.g., compliance certificates, financial information verification).
* Mention that it does **not** constitute an audit or review under auditing standards.
3. **Management's Responsibility**
* State that management is responsible for accuracy and completeness of information provided.
* Management to provide access to records, explanations, and other information as needed.
4. **Auditor’s Responsibility**
* To issue certificate based on procedures agreed.
* Limitation on assurance level (e.g., “reasonable assurance is not being expressed”).
5. **Terms of Engagement**
* Fees and payment terms.
* Confidentiality clause.
* Limitation of liability clause if applicable.
* Use of the certificate only for the IPO purpose.
6. **Reporting**
* Form and content of certificate to be issued.
* No distribution to third parties without consent.
7. **Acceptance**
* Request signature of authorized representative to confirm agreement.
---
### Sample Engagement Letter (Excerpt)
```
[Auditor’s Letterhead]
Date: [DD/MM/YYYY]
To,
[Client Name & Address]
Subject: Engagement Letter for Issue of Special Purpose Certificate in relation to Initial Public Offer (IPO)
Dear [Client’s Contact Name],
We are pleased to confirm our understanding of the terms and objectives of our engagement and the nature and limitations of the services we will provide with respect to issuing the special purpose certificate(s) required for your proposed Initial Public Offer (IPO).
**Scope of Work:**
We will issue a certificate confirming [specify the nature of certificate, e.g., compliance with SEBI requirements, verification of financial information] based on the documents and information provided by you. This engagement does not constitute an audit or review under auditing standards and hence, does not provide any assurance on the financial statements.
**Management’s Responsibilities:**
You are responsible for the accuracy and completeness of all information and representations provided to us. You shall provide access to all relevant records, documents, and personnel as required to complete the certification.
**Our Responsibilities:**
Our responsibility is to perform the agreed-upon procedures and issue the certificate based on the information and documents provided. We will not express an audit opinion or provide any assurance.
**Fees and Terms:**
Our fees for this engagement will be [specify fees] payable as agreed. This certificate is intended solely for the purpose of the IPO and should not be used for any other purpose without our written consent.
**Confidentiality:**
All information obtained during this engagement will be kept confidential and will not be disclosed without your permission, except as required by law.
Please sign and return the enclosed copy of this letter to indicate your acceptance of the terms of this engagement.
Yours faithfully,
[Auditor’s Name & Signature]
Acknowledged and agreed by:
[Client’s Authorized Signatory]
Date:
```
---
### Regarding the **Guidance Note on Reports and Certificates for Special Purposes**:
Yes, the **Guidance Note on Reports and Certificates for Special Purposes (ICAI)** is applicable and provides detailed directions on framing reports/certificates for non-audit assignments. It helps auditors define scope, responsibility, disclaimers, and report format to avoid misunderstandings.
You should definitely refer to this Guidance Note while drafting the certificate and engagement letter for IPO-related certifications.
---
If you want, I can help you prepare a detailed, tailored engagement letter based on your specific IPO certification needs. Would you like that?
---
### Key Components of a Special Purpose Engagement Letter for IPO Certificates:
1. **Introduction**
Identify parties (auditor and client), date, and subject (issuance of certificates for IPO).
2. **Scope of Work**
* Specify the exact nature of the certificate(s) to be issued.
* Clarify that it is limited to certification as per requirements for IPO (e.g., compliance certificates, financial information verification).
* Mention that it does **not** constitute an audit or review under auditing standards.
3. **Management's Responsibility**
* State that management is responsible for accuracy and completeness of information provided.
* Management to provide access to records, explanations, and other information as needed.
4. **Auditor’s Responsibility**
* To issue certificate based on procedures agreed.
* Limitation on assurance level (e.g., “reasonable assurance is not being expressed”).
5. **Terms of Engagement**
* Fees and payment terms.
* Confidentiality clause.
* Limitation of liability clause if applicable.
* Use of the certificate only for the IPO purpose.
6. **Reporting**
* Form and content of certificate to be issued.
* No distribution to third parties without consent.
7. **Acceptance**
* Request signature of authorized representative to confirm agreement.
---
### Sample Engagement Letter (Excerpt)
```
[Auditor’s Letterhead]
Date: [DD/MM/YYYY]
To,
[Client Name & Address]
Subject: Engagement Letter for Issue of Special Purpose Certificate in relation to Initial Public Offer (IPO)
Dear [Client’s Contact Name],
We are pleased to confirm our understanding of the terms and objectives of our engagement and the nature and limitations of the services we will provide with respect to issuing the special purpose certificate(s) required for your proposed Initial Public Offer (IPO).
**Scope of Work:**
We will issue a certificate confirming [specify the nature of certificate, e.g., compliance with SEBI requirements, verification of financial information] based on the documents and information provided by you. This engagement does not constitute an audit or review under auditing standards and hence, does not provide any assurance on the financial statements.
**Management’s Responsibilities:**
You are responsible for the accuracy and completeness of all information and representations provided to us. You shall provide access to all relevant records, documents, and personnel as required to complete the certification.
**Our Responsibilities:**
Our responsibility is to perform the agreed-upon procedures and issue the certificate based on the information and documents provided. We will not express an audit opinion or provide any assurance.
**Fees and Terms:**
Our fees for this engagement will be [specify fees] payable as agreed. This certificate is intended solely for the purpose of the IPO and should not be used for any other purpose without our written consent.
**Confidentiality:**
All information obtained during this engagement will be kept confidential and will not be disclosed without your permission, except as required by law.
Please sign and return the enclosed copy of this letter to indicate your acceptance of the terms of this engagement.
Yours faithfully,
[Auditor’s Name & Signature]
Acknowledged and agreed by:
[Client’s Authorized Signatory]
Date:
```
---
### Regarding the **Guidance Note on Reports and Certificates for Special Purposes**:
Yes, the **Guidance Note on Reports and Certificates for Special Purposes (ICAI)** is applicable and provides detailed directions on framing reports/certificates for non-audit assignments. It helps auditors define scope, responsibility, disclaimers, and report format to avoid misunderstandings.
You should definitely refer to this Guidance Note while drafting the certificate and engagement letter for IPO-related certifications.
---
If you want, I can help you prepare a detailed, tailored engagement letter based on your specific IPO certification needs. Would you like that?
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