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Appointment of Auditors Agreement

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APPOINTMENT OF AUDITORS AGREEMENT

This Appointment of Auditors Agreement ("Agreement") is made as of between Client Name: whose registered office is at , and Auditor Name: whose principal office is at .

RECITALS

WHEREAS, the Client requires an independent audit of its financial statements for the period commencing and ending ; and

WHEREAS, the Auditor represents that it is duly qualified, licensed and possesses the professional competence and resources to undertake the audit in accordance with applicable professional standards; and

WHEREAS, the parties wish to set forth their understanding with respect to the Auditor's appointment, scope, responsibilities, fees and other terms governing the engagement.

NOW THEREFORE

In consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. APPOINTMENT

1.1 The Client hereby appoints the Auditor, and the Auditor accepts appointment, to conduct an audit of the Client's financial statements for the period specified above in accordance with generally accepted auditing standards applicable in the jurisdiction of the Governing Law clause.

2. SCOPE OF AUDIT

2.1 The audit shall include examination of accounting records, internal controls to the extent considered necessary by the Auditor, and such tests of transactions and balances as the Auditor deems appropriate to form an independent opinion on the financial statements taken as a whole. The Auditor shall plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

2.2 The detailed scope, including any agreed-upon procedures beyond the statutory audit, shall be described in the Audit Scope Addendum below.

3. AUDITOR RESPONSIBILITIES

3.1 The Auditor shall exercise professional judgment, maintain professional skepticism and comply with applicable ethical requirements including independence. The Auditor shall issue a written audit report expressing an opinion on whether the financial statements present fairly, in all material respects, the financial position and results of operations and cash flows in accordance with the applicable financial reporting framework.

3.2 The Auditor shall communicate, in writing, significant deficiencies or material weaknesses in internal control identified during the audit and any other matters required to be communicated by applicable professional standards.

4. CLIENT RESPONSIBILITIES

4.1 The Client shall provide the Auditor with unrestricted access to all records, documentation, personnel and other information relevant to the engagement. The Client is responsible for the accuracy and completeness of the financial statements and for maintaining adequate accounting records and internal controls.

4.2 The Client shall ensure that all requested information is made available in a timely manner and shall notify the Auditor of any significant events or transactions subsequent to the balance sheet date that may affect the financial statements.

5. FEES AND PAYMENT

5.1 The Client shall pay the Auditor fees for services rendered in accordance with the following schedule and terms.

6. CONFIDENTIALITY

6.1 Each party shall keep confidential and shall not disclose to any third party any non-public information obtained in connection with the audit except as required by law, regulation or professional obligation. The Auditor may disclose confidential information to its professional advisors or as required by professional standards, provided that such persons are bound by confidentiality obligations.

7. INDEPENDENCE AND CONFLICTS

7.1 The Auditor represents that, to the best of its knowledge, it is independent with respect to the Client in accordance with applicable professional standards. The Auditor shall promptly disclose to the Client any circumstances that may reasonably be thought to affect independence.

Auditor confirms independence and will notify Client of any potential conflicts

8. RECORDS, WORKING PAPERS AND REPORTS

8.1 The Auditor's working papers, including drafts and internal memoranda, shall remain the Auditor's property. The Auditor shall retain the right to destroy such working papers in accordance with its retention policies, subject to applicable legal or regulatory requirements.

8.2 Final reports issued by the Auditor shall be delivered to the Client in the number of copies agreed and shall not be published or otherwise made available to third parties without the Auditor's prior written consent, except where required by law.

9. LIABILITY AND INDEMNITY

9.1 The Auditor shall perform services with reasonable care and skill. Except to the extent prohibited by law, the Client agrees to indemnify and hold harmless the Auditor against liabilities, losses, costs and expenses arising out of any claim resulting from the Client's failure to provide accurate or complete information or any breach of this Agreement by the Client.

9.2 The parties may agree on limitations of liability for direct damages; however, neither party shall limit liability for fraud, willful misconduct, or gross negligence.

10. TERM AND TERMINATION

10.1 This Agreement shall commence on the date first written above and shall continue until the completion of the audit and delivery of the final audit report, unless earlier terminated in accordance with this clause.

10.2 Either party may terminate this Agreement for material breach by the other party if such breach is not remedied within thirty (30) days following written notice specifying the breach. Termination shall not relieve the Client of the obligation to pay the Auditor for services performed and expenses reasonably incurred up to the effective date of termination.

11. NOTICES

11.1 All notices, requests or other communications under this Agreement shall be in writing and delivered to the addresses set forth below or to such other address as either party may designate by notice to the other.

12. AMENDMENTS AND WAIVER

12.1 No amendment, supplement or waiver of any provision of this Agreement shall be effective unless made in writing and signed by duly authorized representatives of both parties. No failure or delay by either party in exercising any right shall operate as a waiver.

13. GOVERNING LAW

13.1 This Agreement shall be governed by and construed in accordance with the laws of the jurisdiction designated below without regard to conflict of law principles.

14. ENTIRE AGREEMENT

14.1 This Agreement, together with any schedules and addenda executed by the parties, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, understandings and agreements, whether written or oral.

15. SEVERABILITY

15.1 If any provision of this Agreement is held to be invalid, illegal or unenforceable, the remainder of this Agreement shall continue in full force and effect and the parties shall negotiate in good faith to replace the invalid provision with a valid provision that achieves, to the extent possible, the economic, business and other purposes of the invalid provision.

16. COUNTERPARTS

16.1 This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

17. DISPUTE RESOLUTION

17.1 The parties shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement through negotiation. If negotiations fail, the dispute shall be resolved in the courts of the jurisdiction specified in the Governing Law clause, unless the parties agree in writing to alternative dispute resolution.

ADDITIONAL PROVISIONS

Client Name:

By:

Date:

Auditor Name:

By:

Date:

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What an Appointment of Auditors Agreement Is and when it’s used

An Appointment of Auditors Agreement is a formal contract by which a company or other reporting entity designates an independent auditor to examine its financial statements or specific accounts. The document sets the scope of work, the period covered, auditor independence requirements, deliverables (such as audit reports), timing, fees, and dispute resolution provisions. It is used by corporate boards, audit committees, nonprofits, and other entities to record mutual obligations and create an enforceable basis for engagement. The agreement also documents the company’s authorization for the auditor to request records and confirms access to management, records, and personnel necessary to perform the audit.

Why appointing auditors through a written agreement matters

A written appointment clarifies responsibilities, confirms auditor independence, establishes deliverables and deadlines, and limits ambiguity about fees and access. Clear agreements reduce disputes, support regulatory compliance, and provide evidence of authorization for third-party reviewers and regulators.

Why appointing auditors through a written agreement matters

Who typically completes an Appointment of Auditors Agreement

The agreement is commonly used by both private and public entities as part of standard governance and financial reporting practices.

  • Corporate board or audit committee members responsible for selecting external auditors and approving engagement terms.
  • Chief Financial Officer or corporate secretary who manages financial reporting and executes contracts on behalf of the entity.
  • External audit firms accepting the engagement and confirming independence, scope, and fees.

Core clauses to include in a professional appointment

A thorough appointment addresses scope, timing, fees, auditor independence, management responsibilities, access rights, and reporting format to avoid later disputes.

Scope

Define audit type (financial statement, internal controls, agreed-upon procedures), period covered, and any excluded areas to set expectations clearly.

Deliverables

Specify final reports, management letters, drafts, the format (PDF/hard copy), and distribution list for completed audit materials.

Timing

State commencement, interim milestones, fieldwork windows, and the deadline for issuance of final reports to align with filing needs.

Fees

Detail fee structure: fixed, hourly, or milestone-based, expenses reimbursement, invoicing schedule, and payment terms.

Independence

Require auditor independence statements and identify any permitted non-audit services with pre-approval processes.

Access & Records

Grant auditor access to books, systems, personnel, and third-party confirmations; include confidentiality and data handling clauses.

Essential information to include at the top of the agreement

Entity name: Legal entity name to match formation documents
Auditor name: Firm and partner lead
Effective date: MM/DD/YYYY format
Scope period: Fiscal year or date range
Fee terms: Fixed/estimate and billing cadence
Governing law: State selected for disputes

Step-by-step: completing the Appointment of Auditors Agreement

Follow these sequential steps to prepare, approve, and execute the engagement reliably.

  • 01
    Draft terms: Describe scope, fees, timing, deliverables and confidentiality
  • 02
    Obtain approvals: Secure board or audit committee sign-off where required
  • 03
    Confirm independence: Auditor provides independence letter and disclosures
  • 04
    Execute agreement: Authorized signatories sign and date the final document

Typical online workflow settings for digital completion

Configure these workflow elements when preparing the document for electronic distribution and signing.

Field Configuration
Signature field Required; signer and date
Authentication Email+SMS code recommended
Routing order Sequential or parallel
Audit log Enable detailed trail

Where to send or file the executed agreement

An executed appointment should be distributed to internal stakeholders and stored in official records for governance and compliance.

  • Board records: File the signed agreement with corporate minutes and resolutions
  • Finance department: Provide copies for accounting and audit planning
  • External auditor: Return a fully executed copy to the audit firm
  • Document retention: Store in a secure records system per retention policy

Digital signing and eSubmission considerations

Ensure the chosen platform complies with ESIGN and UETA and can retain a reproducible record for legal and regulatory needs.

  • Authentication: Email + SMS code or stronger
  • Audit trail: Capture IP, timestamp, and signer info
  • Formats supported: PDF and DOCX preservation

Typical timing and deadlines to plan around

Track these common timepoints to align audit work with reporting cycles and statutory filings.

Board approval date:

Set before auditor begins fieldwork to establish authority

Fieldwork window:

Agree on start and end dates to minimize interruptions

Draft report due:

Specify when auditor provides draft for management review

Final report deadline:

Fix a firm date to support filings and disclosures

Follow-up items:

Define period for management response to findings

Consequences and risks of an incomplete or incorrect appointment

Regulatory delay: Late filings or reports
Audit disputes: Scope disagreements or fee claims
Independence breaches: Potential disallowance of audit opinion
Contract claims: Breach-of-contract exposure
Reputational harm: Stakeholder confidence loss
Financial cost: Additional fees or penalties

Common preparation mistakes to avoid

  • Failing to document board authorization for the appointment, which can call the auditor’s authority into question and delay engagement start.
  • Leaving the engagement scope vague, resulting in unexpected requests, scope creep, and disputed fees between the auditor and the entity.
  • Not confirming auditor independence or permitted non-audit services in writing, which can create compliance issues under professional standards.
  • Missing or inconsistent effective dates and signature blocks, which can cause enforcement disputes and confusion about the audit period.

Who signs and what authority they need

Corporate Secretary

Signs on behalf of the entity when authorized by the board; must ensure appointment is consistent with corporate resolutions and bylaws and that the signature is recorded in corporate minutes.

Engagement Partner

The auditor’s authorized representative signs to accept terms; the partner should confirm independence and that the firm can deliver the agreed scope within the time and fee structure.

Real-world examples of common appointment scenarios

Two concise examples show how appointments differ by entity type and reporting need.

Private LLC Engagement

A family-owned LLC appointed a firm for a year-end financial statement audit covering 01/01–12/31

  • engagement excluded tax preparation to avoid conflict
  • the agreement required board approval, fixed fees, and delivery within 60 days of fieldwork completion to support lender covenants.

Public Company Audit

A publicly reporting company engaged auditors for annual audit and internal control review

  • auditor independence disclosures and SEC reporting timelines were mandatory
  • the contract specified interim deliverables, a management letter, and coordination with the audit committee for reviewer access.

Practical tips for accurate and efficient completion

Use these practical measures to reduce friction and ensure the engagement is enforceable and effective.

Confirm authority in writing
Attach the board resolution or written meeting minutes that approve the appointment to establish clear authorization and prevent later challenges to the auditor’s mandate.
Be explicit about scope limits
Spell out excluded procedures, agreed-upon procedures, and any limitation on inquiry to avoid scope disputes and to control cost.
Use consistent dates and versions
Ensure the effective date, scope period, and amendment clauses align across all pages and attachments to prevent ambiguity in enforcement.
Preserve an auditable record
Keep signed copies, electronic audit trails, and correspondence tied to the engagement to support regulatory reviews and future inquiries.

eSignature vendor pricing and capabilities for signing auditor appointments

Common vendor plans and core capabilities for executing and retaining signed Appointment of Auditors Agreements; signNow is listed first per comparison guidelines.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by vendor Varies by vendor Varies by vendor Varies by vendor
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Frequently asked questions about Appointment of Auditors Agreements

Answers to common questions about execution, signatures, and enforceability when documenting an auditor appointment.


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