The correct answer is: To set out the terms of the engagement and to prevent misunderstandings.

To restrict the auditor's liability in respect of the statutory audit and to disclaim liability to third parties describes a report to management on internal controls.

To confirm matters of significance to the financial statements describes written representations.

To inform the shareholders about matters regarding the auditor's resignation or removal that should be brought to their attention describes a 'statement of circumstances' which auditors normally make when they vacate the office of auditor.

It is not usually possible for auditors to limit their liability to audit clients.