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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.

Company research

Use our company research tools to obtain the latest company profiles as part of your account opening and compliance.

Engagement letters

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

The engagement letter protects the firm by provide 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. It also enables firms to communicate the legal requirements of the Services Directive and ethical requirements such as the basis of fees and the firm's complaints handling.

Guidance on the preparation of engagement letters

The Advisory Services helpsheet entitled 'Engagement letters PAS2/HS13' is structured as follows:

The Tax faculty publishes 'Engagement Letters for Tax Practitioners' (TAXGUIDE 1/13) as part of a collaborative working party comprising ACCA, ATT, CIOT, ICAEW and ICAS. Consequently, given its separate provenance, this provides member firms with some alternative wording for the covering letter and the terms and conditions of business, its schedules include the following:

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

If you haven’t issued an engagement letter

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.

Sources for engagement letters