Engagement Letters for Accountants & CPAs
Engagement Letters provide Accountants and CPAs with essential protective wording for your practice. In addition, they allow you the opportunity to market additional services and ultimately create a stronger relationship with your clients.
Engagement letters should be utilized for all services and include:
- Outline scope of services
- Clarify all timelines
- Disclose all fees
- Include services not provided
- Include mediation language
Engagement Letters are Essential to your Practice
As the title implies, Accountants & CPAs should truly consider engagement letters essential to every service that they provide. This is regardless of the extent of the service, or the length of time that you have known the client.
A good percentage of professional liability claims arise because the client assumed that the accountant was providing a greater breadth of services than they were actually engaged to. A thorough engagement letter can be the basis of defense in responding to such an allegation. This is also why engagement letters should not only include those services that you have been engaged for, but outline those services that you are specifically not providing.
In defining what services you are not providing, you open the door to suggest further services that you can provide your client. While protecting yourself, you are effectively marketing your services.
Many Accountants / CPAs fear using engagement letters will alienate long-standing clients, or are over complicated for simple engagements. In reality, clients will be most satisfied when their expectations are based on a clear understanding of the services they are receiving.
Finally, each of your engagement letters should include a mediation clause. This will mitigate the potential severity of any claims that do arise and can be effective in maintaining client relationships when unfortunate scenarios do arise.
Accounting Engagement Letter Resources
These example engagement letters are intended solely for general educational purposes. They are not intended for the purpose of providing specific legal, accounting, or other professional advice to any particular recipient or with respect to any particular jurisdiction. The author, publisher, and distributor of this document (1) make no representations, warranties, or guarantees as to its technical accuracy or compliance with any law ( federal, state, or local) or professional standard; and, (2) assume no responsibility to any recipient of this document to correct or update its contents for any reason, including changes in any law or professional standard. Before using any engagement letter in your practice, you should formally retain the counsel of an attorney knowledgeable as to the accounting industry, your practice, and the laws of any jurisdiction(s) within which you conduct your practice to ensure the document's maximum usefulness and compliance with applicable laws and professional standards.