(b) According to HKSA210 (Clarified), the objective of the auditor is to accept or continue an audit engagement only when the basis upon which it is to be performed has been agreed, through establishing whether the preconditions for an audit are present and confirming that there is a common understanding between the auditor and management and, where appropriate, those charged with governance of the terms of the audit engagement.

Required:

Explain the steps to be taken by an auditor in order to establish whether the preconditions for

an audit are present.