Which of the following best describes the purpose of audit engagement letters?

The purpose of audit engagement letters is to outline the terms, responsibilities, and expectations for the audit. This letter serves as a formal agreement between the auditors and the client, clearly defining the scope of the audit, the timing of the audit activities, and the responsibilities of both parties. It sets the stage for the audit process, ensuring that everyone involved has a mutual understanding of the objectives and deliverables. This clarity helps prevent misunderstandings or disputes later in the engagement, making it a crucial component of any audit process.

The other choices do not accurately capture the primary function of audit engagement letters. Summarizing previous audits does not align with the purpose of establishing terms for the current engagement. Ensuring compliance with accounting standards is a responsibility of the auditors but not the specific aim of the engagement letter itself. Moreover, prohibiting scope changes goes against the collaborative nature of audit work, which often requires adaptability in response to emerging findings during the audit. Therefore, outlining the terms, responsibilities, and expectations is the most relevant and accurate description of the purpose of audit engagement letters.