$3-29$ A CPA has been asked to audit the financial statements of a publicly held company

for the first time. All preliminary verbal discussions and inquiries among the CPA,

the company, the predecessor auditor, and all other necessary parties have been com$-$

pleted. The CPA is now preparing an engagement letter.

Required:

a$.$ List the items that should be included in the typical engagement letter in these

circumstances.

b$.$ Describe the benefits derived from preparing an engagement letter.

$($AICPA$,$ adapted$)$