You are a partner in an audit firm and your firm has just won the audit for Dezigns Ltd, a company involved in marketing and development of brands for large companies. As per the requirements in ASA 210 Agreeing the Terms of Audit Engagements (ISA 210), you prepare an audit engagement letter. It details the objective of the audit, scope and nature of the auditor's responsibilities, a statement that management is responsible for the preparation of the financial statements and safeguarding company assets, and details about the audit fee. The managing director of Dezigns Ltd is not very impressed when he is handed the letter. He states:

‘My business is operated on trust and my word is my bond. I am not going to sign this agreement because it is getting our relationship off on the wrong footing. I am particularly offended by all of the details outlining my responsibilities — I think I know what they are. However, I know you have certain business practices so I am prepared to sign a contract outlining your audit fees.’

Required

Write a letter to the managing director answering his concerns and explaining why you need a signed audit engagement letter.