CA Rohit is conducting the audit of Taste Ltd., a food production company, for the last two years. Before commencing the audit for the year, he…

As per SA 210, “Agreeing the terms of audit engagements”, recurring audit is an audit which is performed by an auditor over years. In case of recurring audits, the auditor shall assess whether circumstances require the terms of the audit engagement to be revised and whether there is a need to remind the entity of the existing terms of the audit engagement. The auditor may decide not to send a new audit engagement letter or other written agreement each period. However, the following factors may make it appropriate to revise the terms of the audit engagement or to remind the entity of existing terms: (i) Any indication that the entity misunderstands the objective and scope of the audit. (ii) Any revised or special terms of the audit engagement. (iii) A recent change of senior management. (iv) A significant change in ownership. (v) A significant change in nature or size of the entity's business. (vi) A change in legal or regulatory requirements. (vii) A change in the financial reporting framework adopted in the preparation of the financial statements. (viii) A change in other reporting requirements. In the given case, Taste Ltd., a food production company, has undergone a major shift in its product line by expanding into Pharmaceuticals and the company is also subject to new regulatory reporting requirements. In view of the abovementioned factors, it is appropriate to revise the terms of the audit engagement in accordance with SA 210. Thus, the viewpoint of CA Rohit regarding no need for issuance of a new engagement letter is not correct, CA Rohit is required to send the revise audit engagement letter.