The engagement letter is the contract between you and your auditor. Beyond the fee and the scope, several clauses materially affect the relationship, timing, change orders, indemnities, and termination. Knowing what to look for matters.
What you'll learn
→ Scope and deliverables → Fee structure and change orders → Timeline → Indemnity and limitation of liabilityScope and deliverables
The scope should specify: the entity audited (legal name, country), the financial year, the framework (IFRS, IFRS for SMEs, local GAAP), the deliverable (audit report on financial statements, plus management letter, plus tax computation if included).
Confirm that everything you need is in scope. If you need a tax computation for the FTA but the engagement is audit-only, you will pay extra. If you need group consolidation but the engagement is single-entity, you will pay extra. Be specific upfront.
Fee structure and change orders
Most UAE auditors quote a fixed fee for the standard scope. Change orders apply when scope expands, new entities, additional procedures, complex transactions. The engagement letter should specify the change order trigger and the rate.
Hourly rates for change orders typically range from AED 200 (junior staff) to AED 1,500+ (partner). The blended rate matters. A few hours of partner time on an unexpected issue can add 15-20% to the audit fee. Negotiate the cap.
Timeline
The engagement letter should set: kick-off date, fieldwork start, fieldwork end, draft report date, sign-off date. Most UAE audits run 4-8 weeks end-to-end for SMEs, 8-16 weeks for mid-market and groups.
Build a buffer for management responses to draft findings. The auditor's draft report typically lands 1-2 weeks before final sign-off. If you need legal or tax input on the draft, ensure that fits within the timeline.
Indemnity and limitation of liability
Most engagement letters cap the auditor's liability, typically at the audit fee or a multiple thereof, often AED 5-10M. Read this clause. Negotiate where appropriate. Some letters also include indemnity clauses where you protect the auditor from third-party claims. Read these too.
Termination: how either party can end the engagement, and what happens to fees if termination occurs mid-audit. Standard clauses allow either party to terminate with notice, with fees pro-rated. Avoid clauses that lock you in unconditionally.
This guide is general information, not professional advice. For situations that involve specific facts, talk to your accountant, or hire one of ours from the marketplace.