When engaging services from external auditors, which of the following should be established FIRST?
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A. B. C. D.B.
When engaging services from external auditors, the first thing that should be established is a nondisclosure agreement (B). A nondisclosure agreement is a legally binding document that outlines the confidential information that the external auditor is permitted to access and how they are allowed to use it. The nondisclosure agreement ensures that the auditor will not disclose any confidential information to unauthorized individuals or use it for any purposes other than those specified in the agreement.
Once the nondisclosure agreement is established, the organization should proceed to establish a service level agreement (C). A service level agreement is a contract between the organization and the external auditor that outlines the agreed-upon level of service that the auditor will provide. The service level agreement should cover topics such as the scope of the audit, the timeframe for the audit, and the reporting requirements.
An operational level agreement (D) is an agreement between the organization and the external auditor that outlines the operational details of the audit. This could include details such as the communication channels between the organization and the auditor, the frequency of meetings, and the escalation procedures for issues that arise during the audit.
Termination conditions agreements (A) are agreements that outline the conditions under which either party can terminate the engagement. This includes circumstances such as breaches of contract, failure to meet deadlines, and other issues that may arise during the engagement. While termination conditions agreements are important, they should not be established as the first step when engaging external auditors.
In summary, when engaging services from external auditors, the first thing that should be established is a nondisclosure agreement (B), followed by a service level agreement (C), and then an operational level agreement (D). Termination conditions agreements (A) should be established after these agreements have been put in place.