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Hold Harmless Letter

Hold Harmless Letter

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Good Morning

I have an new auditor wanting to see an audit file from the previous year. Clearly there needs to be some form of hold harmless letter to be prepared but a search of the internet has not found anything.

Who is to produce this letter and is there anything I can produce on the firm's letterhead in advance of the meeting.

I also have a file with some preliminary notes for the year that they are auditing although nothing was signed off or reviewed I presume they have no right to see those files within their review.

Any help or links would be gratefully appreciated.

Kind regards

David

Replies (9)

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By johngroganjga
03rd Apr 2014 09:09

First things first

Have you considered whether you should be making the files available at all?

I no longer do audits, but when I did the firm's policy, and that of all other firms as far as I am aware, was not to make audit files available to outsiders - hold harmless letters or not. 

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Replying to justsotax:
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By DavidThrelfall
03rd Apr 2014 09:12

Morning John

Thanks for your reply. Unfortunately I am just a lowly audit manager the audit partner has made the decision and he has stated that he has no objection to them reviewing our previous year's audit file and that is his policy

Regards

 

David

 

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Replying to justsotax:
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By The Limey
03rd Apr 2014 11:35

Now has to be provided

johngroganjga wrote:

Have you considered whether you should be making the files available at all?

I no longer do audits, but when I did the firm's policy, and that of all other firms as far as I am aware, was not to make audit files available to outsiders - hold harmless letters or not. 

The law on this has changed and predecessor auditors are now required to make available 'relevant information'. See ICAEW TECH 01/08 for more info.

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By Sherman Holter
03rd Apr 2014 09:38

Que ?

For the less enlightened (and that includes me), could someone explain what a hold harmless letter is and why it is so called.

Thank you.

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Replying to Duggimon:
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By DavidThrelfall
03rd Apr 2014 09:47

A hold harmless letter is a document that is used if someone wishes to look at papers and files of a client that were prepared for another purpose. Examples may include:

A new auditor wanting to look at predecessor audit papers for the preceding year.

A client wishing to acquire a new company may wish to review the accounting and tax files of the accountant who prepares the accounts for the company that is being acquired.

Hope that explains stuff.

Regards

David

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By Canary Boy
03rd Apr 2014 09:49

Try your old friend GOOGLE this is what I found
Definition of 'Hold Harmless Clause'

 

A statement in a legal contract stating that an individual or organization is not liable for any injuries or damages caused to the individual signing the contract. An individual may be asked to sign a hold harmless agreement when undertaking an activity that involves risk for which the enabling entity does not want to be legally or financially responsible.

Also known as hold harmless provision.

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By johngroganjga
03rd Apr 2014 12:26

I am aware of Tech 01/08, but it falls well short of requiring access to everything.  It is about responding to specific, relevant and reasonable requests.

What I am querying here is granting a successor auditor unfettered access to an entire file.  I do not mean to suggest that the outgoing auditor does not have a duty to respond to any specific and reasonable requests from a successor.

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By TerryD
04th Apr 2014 13:17

It's normal these days for the successor firm to request (in the format prescribed in AAF 01/08) to come and see the whole audit file for the previous year (and maybe the one before that too). Such a request cannot be refused - AAF 01/08 also sets out the format of the reply from the existing auditor (effectively the hold harmless letter).

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By TerryD
04th Apr 2014 13:23

P.S.

I always add a paragraph to the reply to the successor firm's letter asking them to confirm in writing their acceptance of the terms included in my reply. So we have the successor's request letter, my reply (both in the laid down format), and then the successor's written acceptance of terms of access.

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