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An Audit Engagement Withdrawal Letter is a critical document used when an audit firm needs to formally terminate its audit services before completion. This document, governed by Hong Kong's regulatory framework, is typically employed when circumstances arise that make it impossible or inappropriate for the auditor to continue, such as independence issues, scope limitations, or significant disagreements with management. The letter must comply with the Professional Accountants Ordinance, Hong Kong Standards on Auditing, and the Code of Ethics for Professional Accountants. It serves multiple purposes: formally documenting the withdrawal decision, protecting the audit firm's professional interests, ensuring proper communication with the client, and facilitating an orderly transition to successor auditors if applicable. The document becomes particularly important in Hong Kong's context, where strict regulatory requirements govern audit practices and corporate governance.

1. Letter Header and Date: Formal business letter header including the date and addressee details

2. Engagement Reference: Clear identification of the audit engagement being withdrawn from, including relevant dates and engagement letter reference

3. Purpose Statement: Direct statement of the letter's purpose - to formally withdraw from the audit engagement

4. Basis for Withdrawal: Professional explanation of the circumstances necessitating withdrawal, stated factually and without accusatory language

5. Effective Date: Clear statement of when the withdrawal takes effect

6. Status of Work: Summary of work completed to date and current status of the audit

7. Professional Obligations: Statement regarding confidentiality commitments and handling of documents

8. Next Steps: Guidance on immediate actions required, including appointment of new auditors

9. Professional Courtesy: Formal closing paragraph expressing professional courtesy despite the withdrawal

10. Signature Block: Formal signature section with firm's details