The Engagement Letter and Annual Accounts: How to Close the Audit on Time Without Chasing Signatures

The Race Against the Corporate Calendar

For an auditor or tax adviser, the calendar is not a reference: it is a countdown. Between January and June, the pressure to approve the Annual Accounts, legalise the books and file documentation with the Companies Registry turns every day into a critical milestone.

Yet the biggest risk is rarely in the figures. It is logistical. The accounts are closed, the report is reviewed, but the signature of the CEO or one of the board members is missing. They are travelling. They are in another city. They are “pending review”.

The classic result is courier runs, printed versions moving from office to office and the real threat of filing late, with the consequences that brings: registry freeze, penalties and reputational damage.

Technology removes that bottleneck. But it must be done properly.

The First Bottleneck: the Engagement Letter

Before starting any audit work, professional standards require formalising the Engagement Letter. Without it, there is no clear professional coverage on scope, fees or responsibilities.

The usual problem is delay. The client receives the document by email, prints it, signs it, scans it and returns it days or weeks later. Meanwhile, the technical team waits.

When the Engagement Letter is sent for electronic signature:

• The client receives it on their device and can sign it immediately.
• The exact date and time of acceptance are recorded.
• Electronic evidence is generated that proves the formal start of the professional relationship.

The practical effect is twofold: operational time is saved and the moment from which the auditor’s responsibility begins is clearly defined.

The Critical Challenge: Signing the Annual Accounts

Approval of the Annual Accounts is a formal act that requires the signature of all directors. There is no room here for improvised solutions.

Why a Scanned Signature Is a Risk

It is common for a director to send an image of their signature to “insert” into the final PDF. From an evidentiary standpoint, this is very weak.

An image pasted into a document does not guarantee:

• That the person actually signed that specific document.
• That the content was not modified afterwards.
• That the signed version is the final one.

In an ICAC inspection or a corporate dispute, that type of “signature” can be easily challenged.

Advanced Electronic Signature as the Minimum Standard

For documents of high legal value such as the Annual Accounts, the appropriate option is advanced electronic signature.

This type of signature provides two essential guarantees:

1. Content integrity (cryptographic hash)
When signing the accounts PDF (Balance Sheet, Profit and Loss Account, Notes), a unique hash is generated —for example using SHA-256— which acts as a digital fingerprint of the document.

If anyone changes a single figure after the signature, the hash changes and the signature is invalidated. This protects both the director and the auditor: the signed document is exactly the one that will be filed.

2. Signer identity
The advanced signature links the signer’s identity through mechanisms such as OTP to mobile, digital certificate or biometrics. This prevents impersonation and strengthens the traceability of the process.

In an environment where corporate and criminal liability can arise from the approval of accounts, this robustness is not optional.

Anti-Money Laundering Compliance (KYC)

Audit and tax advisory firms are obliged entities under Anti-Money Laundering legislation. This means identifying the Beneficial Owner and keeping evidence of due diligence.

The operational problem is well known: paper forms, ID copies, constant reminders and incomplete files.

Digitising the process makes it possible to:

• Send the beneficial ownership declaration via a form with electronic signature.
• Record date and time of sending and receipt.
• Keep a complete audit trail.

In the event of a review by the competent authority, the firm can prove not only that it requested the information but when and how it was accepted and signed.

Integration with the Firm’s Software

Real efficiency does not mean sending documents manually from an external platform but integrating electronic signature into the firm’s usual software (A3, Sage, SAP or others).

With API integration:

• The auditor completes the report in their system.
• Clicks “Send for signature”.
• The system automatically identifies the directors.
• Automatic reminders are managed.
• Once signed, the documents are filed in the document management system.

The result is a continuous flow, with no manual handoffs, no risk of forgetting to send and full traceability.

Frequently Asked Questions (FAQs)

Is electronic signature valid for approving Annual Accounts?
Yes. The eIDAS Regulation recognises the legal validity of electronic signature. For high-impact corporate documents, advanced electronic signature that guarantees identity and integrity is recommended.

Can the Companies Registry reject accounts signed electronically?
Not because they are electronic. What matters is that they meet the formal requirements and that the signature makes it possible to prove the authenticity and integrity of the document.

Does electronic signature replace physical delivery of the engagement letter?
Yes. It makes it possible to formalise the engagement with full legal validity, eliminating delays and reducing the risk of document loss.

Is simple signature enough for critical corporate documents?
It depends on the risk. For Annual Accounts and material contracts, prudent practice is to use advanced electronic signature, which offers stronger evidentiary weight.

Conclusion

In audit and tax advisory, the risk is not only a wrong journal entry but a critical document left unsigned in time. The busy season does not allow for logistical improvisation.

Digitising the Engagement Letter, approval of Annual Accounts and compliance processes through advanced electronic signature and automated integration is not a question of modernity but of control.

Closing on time, with full traceability and solid legal certainty, is today a real competitive advantage for any audit firm or tax practice.