Accountants are required to have engagement letters with each client.
Engagement letters help set expectations and define the business contract between a professional firm and its clients. It outlines the fee structure, responsibilities and obligations of the accounting firm and its client.
CPA Canada requires professional accounting firms to have engagement letters signed for all engagements with personal and corporate clients. They can also be required by the professional liability insurance providers for professional firms.
An engagement letter must be signed by authorized representatives of both parties before it is considered to be a legally binding arrangement. Since this letter is treated as a contract, it should address the obligations of both parties.
The engagement letter that True North uses focuses around the Notice To Reader financial statements, but have been tailored to encompass all the services we provide to a specific client.
Engagement letters typically include the following sections:
1. Identification
2. Scope of Services
3. Period of Engagement
4. Fee Structure and payment structure
5. Responsibilities
6. Professional Standards
7. Terms & Conditions
8. Confirmation of Accepted Terms