Client engagement

Guidance on the issues to be considered before accepting an appointment and best practice in drawing up an engagement letter upon accepting an appointment.

Members should also consult the Practice Assurance Standards, particularly the detailed guidance in Standard 2: client acceptance and disengagement.

Before accepting an appointment

When considering appointment to a new client we strongly advise firms to exercise due caution and assess the risks involved. Your decision to accept a new appointment should be based on a thorough, risk-based critical assessment of the proposed engagement.

• Decision to accept appointment - PAS2/HS09

  This helpsheet provides a pro forma checklist to form the basis of a critical assessment of a proposed engagement ahead of accepting or declining an appointment.

• Money Laundering Regulations 2007

  Obligations under the Money Laundering Regulations 2007 should be satisfied before a practitioner agrees to act for any new client.

Client Screening

Use our client screening service as part of your account opening and compliance procedures to check clients’ names against UK and global watch lists from bodies such as the FSA, Bank of England, Companies House and the EU. Reports on up to ten names are provided free of charge.

Additionally, check out our business services offer on anti-money laundering checks.

Engagement letters

On accepting an appointment, it is considered best practice to provide the client with a suitably worded Engagement Letter.

The engagement letter provides a record of the contract between your firm and the client, and minimises the risk of any future misunderstandings between the parties.

The client, by signing, dating and returning a copy of this letter, demonstrates their acceptance of the contract as summarised including details of the work and the terms and conditions applying to it.

Whilst a letter of engagement is not compulsory for non-regulated work, the issuing of an engagement letter is strongly advised for the successful management of business relationships.

Guidance on the preparation of engagement letters

• 'Engagement Letters for Tax Practitioners' (Tax Guide 2/09)

  The Tax Faculty publishes the tax guide on Engagement Letters for Tax Practitioners.

• The Library & Information Service 

  The LIS holds a wide range of engagement letters and other types of letters used by practices (from comfort letters to letters of representation).

• Engagement letters: Clarity ISA compliant PAS2/HS13 

  This helpsheet explains the importance of Engagement letters and provides a range of sample draft wordings for different types of engagement. This helpsheet has been updated to meet the requirements of the clarity ISAs effective for accounting period ending on or after 15 December 2010.

• Engagement Letters PAS2/HS13 April 2010 

  This helpsheet discusses the importance of Engagement Letters and provides a range of sample draft wordings for different types of engagement.

If you haven’t issued an engagement letter

• What if you haven't issued an engagement letter? 

  This helpsheet provides information and guidance on the minimum requirements member firms must communicate to their clients in writing in the absence of an engagement letter. It is written for firms not engaging in regulated work.

Professional enquiry

Professional enquiries should be made with the prospective client’s existing accountant to establish if there are any considerations that might affect the firm’s decision whether to accept appointment.

• Changes in Professional Appointment (PAS2: HS05)

  This helpsheet outlines the steps you should take, either when appointed to take over a client from another accountant (whether qualified or not), or when you are approached by another accountant appointed to take over the affairs of one of your clients.