CPA Engagement Letter for Accounting Clients

A CPA engagement letter sets out the work your practice agrees to do, the clients it covers and the terms they accept. List every entity, attach its services and fees, then collect acceptance from people authorised to sign.

What a Letter of Engagement is and What It Does

An engagement letter records the accounting and tax services your practice will provide, for which entities, at what fee and on what conditions. It gives both parties a written reference when a client asks for extra work or disputes an invoice.

A signed engagement letter can form the contract between your practice and the client when the parties validly agree its terms. Engagement agreement, engagement contract and letter of engagement commonly describe the same document. The heading alone does not decide its legal effect.

APES 305 Terms of Engagement requires covered professional-body members in public practice to document and communicate engagement terms. Its preference for doing this before commencement and obtaining written acceptance is distinct from those mandatory duties.

Make signing before work starts your practice policy. Starting with an unsigned letter leaves room to dispute the scope, fees and responsibilities, even where conduct creates an agreement. The clause guide below helps you turn that policy into a document clients can understand.

The Clauses Every Accountant Engagement Letter Needs

Use the following order to build an engagement letter around the actual services and entities. The sample wording is illustrative drafting material, not a complete agreement.

Clause	Purpose	Adaptable sample wording
Parties and entities	Identify your practice and every client covered.	This engagement covers only the clients listed in Schedule A, in the capacities stated there.
Purpose and scope	State each service, period and deliverable.	We will prepare the company’s annual financial statements and income tax return for the period in Schedule B.
Excluded services	Prevent assumptions about extra work.	Audit, legal advice and tax planning are excluded unless separately agreed in writing.
Client responsibilities	Allocate information and recordkeeping duties.	You must provide complete and accurate information, keep your records and tell us about changes affecting this work.
Practice responsibilities	Explain your work and its professional boundaries.	We will perform the agreed services with reasonable care and seek clarification where information appears incomplete or inconsistent.
Fees and billing	Record the calculation, invoices and payment terms.	Schedule C sets out the fee basis, GST treatment, billing frequency and payment period.
Timing	Connect deadlines to client inputs.	We will agree completion timing after receiving the records required for each service.
Ownership of documents	Distinguish client records from practice workpapers.	Your original records remain yours. Our workpapers remain ours, subject to applicable law and agreed access terms.
Confidentiality and privacy	Explain handling and permitted disclosures.	We will protect your confidential information and disclose it only with authority or where law or professional duties require it.
Limitation of liability	State applicable, properly settled terms.	Any agreed liability provisions appear in the attached terms and apply only to the extent permitted by law.
Ending the engagement	Explain notice and handover.	Either party can end the engagement under the notice terms, with outstanding work and records addressed on termination.
Acceptance	Identify who agrees and in what capacity.	By signing, each signatory accepts the terms for the client and capacity recorded beside their signature.

The client-information clause can state that you rely on supplied information. Pair it with your duty to make appropriate enquiries. A blanket reliance clause cannot remove a registered tax agent’s reasonable-care obligations.

APES 305 section 4 discusses purpose, objectives, scope, outputs, responsibilities, other practitioners, fees, ownership and acceptance. Those paragraphs guide tailoring, rather than making every row above a mandatory standalone clause. Confidentiality, applicable outsourcing disclosures and scheme-participant disclosures also carry requirements outside that guide.

Add the outsourced provider, location and work involved where applicable. Explain relevant cloud storage separately. Termination mechanics and many commercial risk terms are practice choices requiring suitable wording. The APES 305 guide covers the paragraph-level distinctions.

For an accounting client, describe the actual reports and lodgements. For each entity, identify who supplies records and who receives advice. Put separate bookkeeping and BAS scope in a bookkeeping engagement letter when that is the job you are accepting.

What a Registered Tax Agent Adds Under the TPB Code

A tax agent’s engagement letter explains how the practice will meet the client’s tax needs while preserving its professional duties. Describe acting in the client’s best interests, confidentiality, keeping the client informed and reasonable care in assessing their affairs.

The current guidance is TPB(GS) 34/2019 Letters of engagement. The TPB strongly encourages engagement letters. A letter is not itself a specific requirement of the Tax Agent Services Act Code, and signing one does not prove compliance.

Add a prominent client-information section. Under section 45 of the Code determination, the TPB requires written information about its public register and complaints process. It also requires general information about your rights, responsibilities and obligations under taxation laws, and your clients’ obligations to you. Communicate relevant prescribed events or matters too.

Give the register link and your registration details. Explain the practice’s internal complaint route and how to complain to the TPB. Supply the TPB client factsheet with the letter and communicate any applicable prescribed matters. These disclosures reach prospective clients too, so do not leave them until signing. Follow the TPB’s timing table for the particular disclosure.

An illustrative identity clause can say: Before adding you to our ATO client list, we verify your identity and the authority of anyone acting for you. We will request the evidence needed for those checks. A signature alone does not prove either point.

Where your practice provides a regulated designated service, add an AML/CTF clause covering customer due diligence and the client information it requires. AUSTRAC’s professional-services guidance explains which activities are caught. General accounting work does not automatically make every engagement a designated service.

A practical clause can require the client to provide identity, beneficial-owner and authority information needed for due diligence before the designated service starts. Link the service schedule to your acceptance checkpoint. An engagement letter does not replace your AML/CTF program or the required checks.

Engagement Letter Template Structure

Keep the main terms consistent and attach client-specific schedules. This numbered template structure is a starting point for your professional body’s template or wording settled by your lawyer.

1. Parties and covered clients. Identify the practice and refer to Schedule A for every client’s legal name, entity type and signing capacity.
2. Purpose and services. Refer to Schedule B for the work, covered periods, deliverables and exclusions for each client.
3. Responsibilities. Explain recordkeeping, complete information, approvals and the practice’s enquiries and professional duties.
4. Fees and timing. Refer to Schedule C for fee calculation, GST, invoicing and payment terms. Record client input deadlines and agreed completion timing.
5. Records and information handling. Explain document ownership, access, confidentiality, privacy, relevant cloud providers and outsourcing.
6. Tax-agent information and due diligence. Include registration, complaints and client-rights information. Add applicable identity, authority and AML/CTF requirements.
7. Liability and ending the engagement. Use settled commercial terms and any required Professional Standards Scheme disclosure. Record notice and handover arrangements.
8. Acceptance. Attach an acceptance block for each client and each required signatory, with their authority recorded.

Schedule A is the entity list. Schedule B is the service schedule. Schedule C is the fee schedule. Give each attachment a version reference so a signed body cannot be mistaken for acceptance of a later fee schedule.

For each acceptance block, provide fields for the client’s legal name, signatory’s name, signing capacity, signature and date signed. Where one person signs for several clients, record each capacity separately. Give every required signatory their own signature line.

One Letter Per Entity or One for the Whole Group

One letter can cover a family group when the parties agree and every client, service and acceptance is clearly identified. Separate letters are safer where scope, confidential information, fees or authority differ. The TPB recommends separate letters for distinct clients unless otherwise agreed.

Consider this fictional group: a trading company, a discretionary trust with a corporate trustee and two individuals. Schedule A lists four clients, with the corporate trustee identified in its trustee capacity. The trustee company’s own tax work needs separate scope if you also perform it.

Client type	Signing checkpoint
Individual	The individual accepts their own engagement, or a representative signs with established authority.
Company	A director or other authorised representative signs under a valid company authority or execution method.
Trust	The trustee accepts in its trustee capacity. For a corporate trustee, use its authorised company signatories.
Partnership	Obtain each partner’s acceptance as your practice policy, or establish a signatory’s authority to bind the partnership.
SMSF	Obtain acceptance from every individual trustee, or the corporate trustee through properly authorised signatories. Record trustee directors and their authority.

Do not assume that every director must sign every ordinary company engagement. Execution rules and delegated authority determine the required signatures. A person signing their individual return engagement does not automatically accept terms for the trust they control.

Incorrect case: a new trust begins operating mid-year and staff prepare its return under the existing group letter without adding it.

Correct case: staff add the trustee in its trustee capacity, agree the trust’s services and fees, then obtain authorised acceptance. An omitted client sits outside the listed engagement terms. Map the group with an entity chart before preparing the letter.

Collect signatures independently for separate letters. For a combined letter, specify when each client’s engagement takes effect and whether another client’s missing signature affects it. Track each required acceptance. Start unaffected work only where the agreed terms and your acceptance checks permit it.

Where CPA, CA ANZ and IPA Templates Fit

Professional-body material gives you a starting point for your engagement letter. It still needs the correct clients, services and commercial terms.

CPA Australia describes a customisable engagement-letter tool covering scope, fees, confidentiality, document ownership and third parties. Use CPA member resources for the tool, rather than treating a public article as the template itself.

CA ANZ’s Australian engagement-letter tool contains sample clauses for preparing engagement documents. CA ANZ marks access as member exclusive, so a member signs in to use the resource.

IPA members can request engagement-letter resources through their member support. The joint accountant’s-letter toolkit concerns letters to lenders and other third parties. It is a different document from the engagement letter your client accepts.

Tailor the entity list and fee terms. Describe your portal and software use, cloud storage, outsourced work and offshore providers accurately. Replace another practice’s information with your own arrangements. Copying a letter found online can carry the wrong client definitions, payment terms or liability provisions into your engagement.

If you participate in a Professional Standards Scheme, use its applicable disclosure and satisfy the scheme’s conditions. The Professional Standards Councils’ disclosure guidance explains the prescribed statement. Inserting a liability clause alone does not establish that a claim is covered or capped.

Sending, Signing and Reissuing the Letter at Onboarding

Send the engagement letter after collecting the client’s details and checking identity and authority. As a practice sequence, obtain acceptance before agent nomination and before work starts. Nomination and linking remain separate ATO steps for clients to whom those requirements apply.

The accounting client onboarding checklist places those checkpoints alongside client acceptance and records collection. Keep the letter’s entity list consistent with the details you use to create client records.

Reissue or amend the letter when scope changes, another entity joins, fees change or a legal change affects a clause. Review recurring engagements on a cycle your practice sets. APES 305 does not require a fresh annual signature for every unchanged engagement.

An electronic signature gives you evidence of acceptance when you retain the signed document and its signing record. Preserve the version, signatory, capacity and signing time. Keep that record with the client file and restrict access to staff who need it.

TPB client-record guidance requires service records for at least five years after the service is completed. Keep the engagement letter supporting those services for that period, and longer where other obligations or a claim require it. An ongoing letter must remain available throughout the work it covers.

Engagement-letter software can carry form answers into the letter and collect signatures. Tax Genie drafts your engagement letter from the client’s answers, lets staff adjust it and keeps the signed version with who signed and when.

Before sending, compare the legal names, ABNs and signatories against the verified client record. Confirm that every service and entity you are about to work on has agreed terms and the required acceptance.