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Your engagement letter is your first line of defence in the event of a fee dispute

11th Sep 2015
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Engagement letters are too long? Engagement letters annoy clients, Engagement letters never get read anyway. Three oft repeated statement I’ve heard from accountants in connection with engagement letters as to the first my answer is an engagement letter is not a “Tweet” or an advert it has to cover lengthy and important issues which need stating, as to the second if a client potential or otherwise is going to be annoyed by an engagement letter then you seriously need to consider whether you wish to act for them going forward and as for the final statement I always say if they sign a copy without reading it then that is their problem.

ICPA

Whenever a dispute arises between an accountant and a client the very first port of call should be the letter of engagement because whether the argument is over fees, responsibilities or actions taken or not taken a half reasonable letter of engagement will have sections dealing with the matter. 

The accountant can then have the provisions available to quote to the client or indeed to the court in the worst case scenario during the dispute.

So having established how important a Letter of Engagement is the next step is to stress how important it is to constantly review and maintain the letter of Engagement for changes that may very well have occurred in your relationship with your client. I recall a case a few years ago only when the accountant sheepishly produced his copy of the letter which was so old it detailed fees in pounds, shillings and pence! Make reviewing and if necessary amending and re-issuing the letter of engagement part of your annual review to avoid being embarrassed.

This blog is taken from the ICPA website. Dedicated to supporting and promoting the needs of the general practitioner. You can find us at www.icpa.org.uk or email [email protected] or phone 0800-074-2896.

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