Engagement letters: Get the details right

For practitioners, there is one administrative burdent that never seems to go away. Drawing on AccountingWEB members' advice, Jennifer Adams offers some tips to minimise the pain.

Putting the words “engagement” and “letters” together is one sure way to elicit a groan from the accounting fraternity - as Mark Lee discovered when he discussed new engagement letter guidance from the profession’s regulatory bodies back in June.This article presents a checklist of points with relevant links to help you if you also have been lumbered with the task of producing (or reviewing) engagement letters.

Register and log in to AccountingWEB.co.uk for fuller explanations of these topics:

  • Why bother?
  • Practical suggestions
  • Use the opportunity to review...
  • Use software to save time
  • How often to prepare?

Jennifer Adams FCIS TEP ATT is a freelance writer and author specialising in tax and company secretarial issues, and can be contacted at Abacus Business Solutions.

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Comments

Basic letter

carol-long | | Permalink

The link to the basic letter does not work

Can anyone supply the text please ?

macdougall's picture

Don't understand

macdougall | | Permalink

I don't understand why it's such a bother.   It's just another document to ask the client to approve.   It runs off the software.  Takes a minute or two each.   And if there's a misunderstanding a well written LoE can save a fortune.

Engagement Letters

Asimpsoni | | Permalink

Issuing them annually??? I can't believe that this is necessary - I have always used 3 years as the basic longevity with extra schedules issued if further services required.

With this and anti money laundering requirements, compliance review and other red tape I will soon be spending more time on admin than on clinet business - surely that can't be right.

But on the bright side - thank heavens for computers - can you imagine doing all this with carbon paper!!

 

Letters of engagement

Asimpsoni | | Permalink

The letter for our firm runs to about 10 pages and we have about 1500 personal clients not to mention corporates and partnerships - that few minutes per client really eats into my secretary's time.

A good tip    1 thanks

philfromleeds | | Permalink

When you raise an engagement letter make sure you send an additional copy for the client to return signed.

Do not email it or fax it, send by Royal Mail.

That way you have checked the address for MLR purposes

Now if the client tells you that he has received it and brings it back or does not sign it, as long as he acknowledges that he has had it you know he lives there.

I suppose you can put a code reference on it and ask him for the number?

Email address, this is important to have for convenience. If you have queries and want proof that you have communicated best to email Q&A's

Emailing accounts saves money. If you are a cheap accountant its worth charging for a hard copy if requested.

 

 

 

Thanks for link but

carol-long | | Permalink

Can we have this text also;

 

'The letter of engagement must include the Limited Assurance Engagement wording contained in the template "letter of engagement for general clients", which can be downloaded from the

MIP Zone '

 

Does It?

Roland195 | | Permalink

philfromleeds wrote:

Now if the client tells you that he has received it and brings it back or does not sign it, as long as he acknowledges that he has had it you know he lives there.

No, it proves he at least has access to that address.  

 

2 opportunities

npreynolds | | Permalink

The engagement letter gives two opportunities to creat terms that are over and above "the usual"

Those opportunities are to limit liability ( I refer to non audit clients only ) and to build into engagement letters for limited liability entities personal guarantees of the owners in reltaion to our fees.

We dont just slide these clauses in we draw clients' attention to them. We experience no resistance to them from clients.

 

 

macdougall's picture

The time it takes

macdougall | | Permalink

Number of pages?  Ours run to 8 pages.

With a computer you don't need a secretary, although I can see the benefit of having one.   It's literally one more doc to send to the client with his tax return / accounts, or whatever.

Always send out two copies, one for the client and one to be returned.  I send an SAE, too, every time I send anything to a client that I would like back.

The only real problems I have are clients in the UAE.   Attachments to emails frequently don't seem to arrive and when I've posted paper they don't seem to arrive, either.   But the CIOT has an answer for this problem.

engagement leeters and PII

malcolmrichards | | Permalink

 

We supply our insured's with suitable wordings as part of our Risk Mnagement for our Underwriters. p.m me advice.

Engagement Letters

haddison | | Permalink

As a MIP, this should be one of the first letter you send to a new client

Client's copy

Eddystone | | Permalink

First time we ever sent out engagement letters we forgot to send copies for clients to retain - not  a single one noticed this !

But surely by definition they don't need to be sent annually ?  If so they'd be called re-engagement letters.

Eddystone

npreynolds | | Permalink

Hi

the engagement letter sets out the details of your contract so it should not need to be replaced unless the contractual arrangement changes or our regulators indicate a chnage is needed.

LoE Software

chatman | | Permalink

macdougall wrote:
It runs off the software.  Takes a minute or two each.

What software? I would love it.

@ Mark Lee, LoE is also mandatory for AAT MiPs

A-salam | | Permalink

Just to clarify that issuing a LoE is also mandatory for AAT Members in Practice. This became mandatory from October 2011.

returned by client

davidlchapman | | Permalink

Does anybody ever check that the signed copy returned by clients is the one they actually sent them to sign and return ie the client has not inserted a clause claiming ownership of your soul?

jon_griffey's picture

Industry standard terms

jon_griffey | | Permalink

 

Engagement letters should really be sent annually as legislative churn is ever increasing.  RTI is the latest one, which will render all payroll engagement letters out of date.  However this is a major administrative burden.

What I want to see are the institutes publish standard industry terms.  In essence you can then boil the engagement letter down to one side of A4 to say something like 'this engagement is in accordance with ACCA standard terms, copies of which can be found on the ACCA website' and then list the services provided, such as accounts, payroll, self-assessment.  ACCA can then continuously update the terms centrally.  Lets face it, probably 98% of the engagement letters are boilerplate and it is daft that we all have to churn it out each time.  I seem to recall that something similar is done with RICS members who simply refer to the RICS standard terms in their engagement letters.

 

Mark Lee - as a respected commentator on engagement letters do you think this idea is a runner?

Software

LouiseHerrington | | Permalink

I'd also like to know what software produces the letters.

 

Thx

JAADAMS's picture

Digita

JAADAMS | | Permalink

My Digita tax return software has a basic engagement letter. - obviously automatically inserts the name and address.

Engagement Letters

denise.poulter | | Permalink

Runs off the software?? What do you use??