Name:

Fatima Shakeel

Roll#

L1F18MCOM7017

CLASS:

MCOM (A)

SUBJECT:

Advanced Audit

(Assignment # 1)

ENGAGEMENT LETTER

SUBMITTED TO:

PROF: IMRAN SHEHZAD

 ENGAGEMENT LETTER

CONTENTS OF ENGAGEMENT LETTER:

1. Audit engagement letter
2. Audit Responsibilities and Regulations
3. Management's Responsibilities and Representations
4. Fees
5. Deliverables
6. Other Matters
7. Our reports
8. Objective and scope of our audit
9. Termination of the engagement
10. Agreement of Terms
 ERNST &YOUNG
Mr. PAN Sorasak
secretary of state and EFIE
Focal Point Cambodia Trade Development Support Project
Lot 19-61, MOC Road (l13B)
combdia

Dear Mr PAN Sorasak,

Audit engagement letter

This engagement letter (Engagement Letter) together with its attachments, including the
General Terms and Conditions (together with the Engagement Letter, this "Agreement")
confirms the terms upon which Ernst & Young (Cambodia) Ltd ("we" or "EY") has been engaged
to audit and report on the financial statements of Cambodia Trade Development Support
Project funded by Enhanced integrated for the year ended 31 December 2010. The objective of
our audit is to express an opinion on whether the financial statements give a true and fair view
of the financial position, results of operations and cash flows of the Project in accordance with
the Project Accounting Policy using US dollar ("USD") as reporting currency. The services
described in this paragraph may hereafter be referred to as either the "Audit Services" or the
"Services."

Audit Responsibilities and Regulations:

I. We will conduct the the audit in accordance with International Standard on Auditing
(lSA) and Cambodian International Standards on Auditing (CISA), according to Prakas No.
370 MEF dated 18 may 2010 issued by Ministry of Economy and Finance. Those
standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable, rather than absolute, assurance about whether the financial
statements are free of material misstatement, whether due to fraud or error. As the
Project is aware, there are inherent limitations in the audit process, including, for
example, the use of judgment and selective testing of data and the possibility that
collusion or forgery may preclude the detection of material error, fraud, or illegal acts.
II. We will communicate in writing significant deficiencies in internal control identified during the
audit of the Project's financial statements.
III. We also may communicate our observations as to the potential for economies in, or improved
controls over, the Project's operations.
 IV. As part of our audit. we will consider, solely for the purpose of planning our audit and
determining the nature, timing, and extent of our audit procedures, the Project's inter control
over financial reporting. This consideration will not be sufficient to enable us to express an
opinion on the effectiveness of internal control or to identify all significant deficiencies.

Management's Responsibilities and Representations

Our audit will be conducted on the basis that management and where appropriate those
charged with governance, acknowledge and understand that they have responsibility:

a) For the preparation and fair presentation of the financial statements in accordance with the Project
Accounting

b) For such internal control as management determines is necessary to enable the preparation of the
financial statements that are free from material misstatement. whether due to fraud or error.

Fees
We estimate that our fees for the 2010 Audit Services will be US$ 1,000 to which we will add value-
added tax at the appropriate rate, currently 10%. Out-of-pocket (OPE) costs such as travel photocopy
and telecommunications is included in the fee.

Deliverables
Upon completion of the Audit Services, we will provide the Project with five (5) bound sets of financial
statements in English, including the audit opinion and the statement of management's responsibility.
Responsibility for filing the reports with the relevant agencies rests with the Project.

Other Matters
The project shall provide us with copies of the printer's proofs of its annual report and other public
document(s) that includes the annual financial statements and our audit opinion or referring to EY as
having audited the financial statements prior to publication for our review. Management of the Project
is primarily responsible to ensure that the annual report and other public document(s) contain no
misrepresentations. We will review the annual report and other public document(s) for consistency
between the annual financial statements and other information contained in the annual report and
other public document(s), and to determine if the financial statements and our report thereon have
been accurately reproduced. If we identify any errors or inconsistencies that may affect the financial
statements, we will advise management and those charged with governance, as appropriate.

Our reports
Our auditors' report on the financial statements should not be reproduced or referred to electronically
without prior agreement as to the manner and context in which it is reproduced or referred to. You may
not rely on any draft Report.

Objective and scope of our audit

The objectives of our audit are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with International
Standards on Auditing (ISAs) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.

Termination of the engagement

This agreement applies to all Services performed at any time (including before the date of this
Agreement). This Agreement shall terminate on the completion of the Services. We may terminate this
Agreement. or any particular Services, immediately upon written notice to you if we reasonably
determine that we can no longer provide the Services in accordance with applicable law or professional
obligations.

Agreement of terms
We appreciate the opportunity to be of assistance to the Project. If this Agreement accurately reflects
the terms on which the Project has agreed to engage us, please sign below on behalf of the Project and
return the duplicate copy of this letter to Ms. Maria Cristina M. Calimbas at SSN Center, 3'd Floor, Room
Cambodia.

Yours faithfully,

We hereby confirm our agreement to the terms of the above letter and the enclosed terms of business.

On behalf of,

Cambodia Trade Development Support Project

PAN SORASAK

Secretary of State and ElF Focal Point