Accounting Engagement Letter A+ Sample + Guide

While these essential elements are common in many accounting engagement letters, they’re not entirely exhaustive as you can add other elements depending on the type of agreement. Elements like agreed deliverables, communication protocols, or third-party access to client data can also be included in an accounting engagement letter. This element in an accounting engagement letter is quite nuanced with significant implications for both the accountant and the client. The bookkeeping engagement letter should include a timeline for the work included along with who is responsible for meeting each milestone. As the bookkeeper, the deadlines should be contingent on receiving access to the client’s information and accounting system. For the client, the timelines should include reasonable turnaround times for the finished project once the information has been provided.

This free resource includes a ton of the most popular accounting templates including monthly bookkeeping, weekly accounting analysis, client onboarding procedures, and common tax return forms. When you are hired as a bookkeeper by a new client, it is important to send an “engagement letter” to your client. This document serves as the guide for your relationship, as it outlines the expectations and responsibilities of both parties during the bookkeeping process. Included is a template letter to use as a guide when you offer your services to a new client.

Download this free bookkeeping engagement letter template — created to include all the key components listed above. Setting the billing upfront (whether it’s a flat rate or hourly fees) forces this discussion to take place prior to how to prepare a statement of retained earnings the project. It drastically increases the chances you will be paid for your services. For long-term engagements, you should update the engagement letter each year to ensure the terms are still correct and the included services cover the entire scope of the client’s requests.

Provides liability protection

An accounting engagement letter is a contract outlining the scope of work, billing rates, and any other relevant terms of the engagement. The contract should be agreed to by all parties prior to commencing work. If additional services are required outside the scope of this engagement, they will be provided at our standard hourly rate of $X per hour.

Clearly state the fee structure, invoicing schedule, when payments will be due, and any late payment penalties, as aforementioned. State the full legal names and business names of both parties involved in the agreement. You want your client to have complete clarity and not be confused as to what their responsibilities are or what the grounds for termination are. The essence of this letter isn’t to impress your client with your accounting knowledge or verbose grammar. It’s to help them understand in the simplest of terms what the terms of your relationship will look like.

Termination provisions

Once signed by both parties, an engagement letter becomes a legally enforceable contract. This means both parties are bound by the terms and conditions outlined in the document. A court what is the debt to total assets ratio can be used to enforce the agreement if there’s a breach of contract. For example, clients have a responsibility to provide prompt, accurate documents and financial information, which will allow you to meet your responsibilities. If you can’t perform the services you’re engaged for because your client hasn’t provided the information you need, you can refer back to your engagement letter.

A Free Bookkeeping Engagement Letter Template

Despite that, modifying and sending an engagement letter template on a client-by-client basis can become difficult to manage as your business expands. This makes practice management software an alternative worth considering. Who handles the accuracy of what causes a tax return to be rejected any information provided to complete the accounting engagement? Is the scope limited to a compilation service or is the client looking for a full audit?

The engagement letter should include the terms for canceling the contract and provide ways for either party to end the engagement. Including standard terms such as requiring 30 days notice to end the contract allow both parties to know they won’t be abandoned in the middle of a project. It is essential to renew your engagement letters regularly, preferably annually. Renewing annually gives you a chance to review your prices and if the scope needs to change. If additional services are required, this gives you a chance to allocate the proper amount of time and adjust your fees accordingly.

1. Before you provide any services, you and your client must agree on the terms of your engagement.
2. Renewing annually gives you a chance to review your prices and if the scope needs to change.
3. If you can’t perform the services you’re engaged for because your client hasn’t provided the information you need, you can refer back to your engagement letter.
4. The Accounting Engagement Letter template from the Karbon Template Library is a good foundation that can be customized to suit your firm and individual clients.
5. Clearly outlining these items at the beginning means the discussions about the project and price have happened before you have invested any of your team’s time in the engagement.

You and your client will each sign both copies of the engagement letter. Our responsibility in this engagement consists of completing the bookkeeping activities outlined above with care and due diligence. Engagement letters should include a provision for how the contract can be ended by either party. This may include clauses such as requiring 30 days notice from either party to terminate the agreement or a statement clarifying the contract can be terminated by either party without notice. Whether you’re working with a single client or dozens, it’s important to protect yourself and your client by getting everything in writing from the outset.

A bookkeeping engagement letter sets the tone and scope of the bookkeeping project. The letter should outline all services that are included in the scope of work. Services included in the scope of work should be well-defined in as thorough of terms as possible. If you enter into a relationship (professional or otherwise) with mismatched expectations between you and the other party, it’s a recipe for disaster.