Sample Engagement Letter - Accounting Software Secrets
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Sample Engagement Letter

Sample Engagement Letter

Sample Engagement Letter 

As with any client work, an engagement letter detailing the scope of the work to be performed is always recommended.  Below is a sample engagement letter.  It is not appropriate for all firms or all situations.  Be sure to consult with legal counsel and/or professional liability insurance company before using this sample.  It is also quite possible that additional services should be included in the engagement letter such as tax planning or return preparation, privacy policy, document retention policy, etc.  SSARS 8 requires a written engagement letter describing the level of service and it is recommended that a signed copy be received from the client prior to beginning work.

It is important for the engagement letter to be as specific as possible as to the work that will be performed.  That is why in the sample, an Appendix would be attached detailing the client specifics.  The more complete the description (remember that the clients often do not understand what we do) and clear the procedures, the less likely there will be any miscommunication. 

Based on a bank reconciliation example in CAMICO Impact, Spring 2003, Issue 59, page 5, here is an example of suggested wording for bank reconciliation procedures:

Each month we will reconcile <Client>’s books and records of the following bank accounts: [Bank name(s) and account number(s)] with the bank statement(s) for proper account balance and to identify reconciling items that may require adjustments to your books and records.  We will not be analyzing cancelled checks to determine weather signatures or payments are authorized or for any other purpose.  [include any other procedures to be completed such as flipping through cancelled checks for unusual signature, spot check of matching information between cancelled check and accounting records, etc.).  By your signature below, you acknowledge that you understand and agree that our services are limited in scope and they are not designed to detect employee embezzlement or other fraudulent activities involving your bank accounts.  Should you wish to expand our procedures to include additional work and investigations, we will arrange this with you in a separate engagement letter.

Dear <Client>:


This letter confirms the services you have asked our firm to perform and the terms under which we have agreed to do that work. Please read this letter carefully because it is important to both our firm and you that you understand what you can and cannot expect from our work. In other words, we want you to know the limitations of the QuickBooks computer consulting services you have asked us to perform. If you are confused at all by this letter or believe we have misunderstood what you need, please call to discuss this letter before you sign it.


Services To Be Provided

At your request and under your direction, we will perform QuickBooks consulting services that will include the services included on the checklist as Appendix A.


By your signature below, you acknowledge that you understand and agree that the QuickBooks data file and other accounting records are solely your responsibility. Our services are not intended to and will not result in the submission or issuance of financial statements by McWilliams & Associates, Inc. as defined by the AICPA Statements of Standards for Accounting and Review Services. 


You also understand and agree that our engagement cannot be relied upon to disclose errors, fraud, or illegal acts that may affect the accuracy or completeness of your accounting records and financial statements.  However, we will inform the appropriate level of management of any material errors that come to our attention and any fraud or illegal acts that come to our attention, unless clearly inconsequential. 

Hardware and Software Warranties


During the course of the engagement, we may recommend a purchase and installation of computer or technological hardware, software, communications, or services by your company.  Warranties, to the extent they exist, are provided only by the manufacturer/developer/vendor of those computer products.  We will do our best to provide appropriate recommendations when available, but the final decision and responsibility to purchase any computer products is at your sole discretion.



Our fees for such services will be the fee provided on Appendix A.  All amounts are due and payable prior to the start of any work. You understand and agree that we may withdraw from the present engagement at any time for any reason at our sole discretion.  In par­ticu­lar, you agree that if you fail to provide the requested information or pay for services for this engagement on the agreed upon schedule, we either may discon­tinue per­form­ing services for you until all outstanding balances are paid and/or may with­draw from the engagement ten days after the mailing of written no­tice to you at the same ad­dress to which state­ments are sent.  You rec­ognize that any discontinuation of work or with­drawal by us could serious­ly harm your in­ter­ests, but nevertheless specif­ically give your con­sent to us to do so and to any court of law, arbitrator or other forum to allow us to withdraw if we choose to withdraw from this engagement for any reason at our sole discretion.

Privacy Policy

As your consultant, we will have access of information provided by you from your correspondence, worksheets, documents and discussion.  In addition, we will collect information that we develop as part of the engagement. 


As your consultant, we are required to keep all information about your engagement confidential so we will not disclose any information about you unless we have your approval or are required/permitted by law.  This applies even if you are no longer a client.


We are committed to safekeeping of your confidential information and we maintain physical, electronic, and procedural safeguards to protect your information.  Although we use services that are deemed to be secure, you assume any risk of transmitting information to us electronically.  We encourage you to understand the technology and make informed decisions before using any of the services.


Record Retention

All original paper documents provided by you will be returned to you promptly as our work is complete.  We do not keep copies of all original paper documents.  It is your responsibility to safeguard the documents in case of future need.  We may occasionally keep some copies we deem necessary to our work.


It is our policy to keep electronic and work paper files for three years.  At the end of that time, paper files may be destroyed and electronic files may be erased.


If any dispute arises among the parties hereto, the parties agree first to try in good faith to settle the dispute by mediation administered by the American Arbitration Association under its Rules for Professional Accounting and Related Services Disputes before resorting to litigation. Costs of any mediation proceeding shall be shared equally by all parties.


Client and accountant both agree that any dispute over fees charged by the accountant to the client will be submitted for resolution by arbitration in accordance with the Rules for Professional Accounting and Related Services Disputes of the American Arbitration Association <or other association>. Such arbitration shall be binding and final. IN AGREEING TO ARBITRATION, WE BOTH ACKNOWLEDGE THAT, IN THE EVENT OF A DISPUTE OVER FEES CHARGED BY THE ACCOUNTANT, EACH OF US IS GIVING UP THE RIGHT TO HAVE THE DISPUTE DECIDED IN A COURT OF LAW BEFORE A JUDGE OR JURY AND INSTEAD WE ARE ACCEPTING THE USE OF ARBITRATION FOR RESOLUTION.


This letter sets forth the entire agreement relating to our work with you. This letter supercedes any prior agreements, discussions or understandings. No amendment or modification of this agreement shall be valid unless in writing, signed by both parties to this agreement.  You may request that we perform additional service at a future date beyond the scope of this engagement letter.  If this occurs, we will communicate with you regarding the scope and estimated cost of these additional services.  Engagements for additional service will necessitate that we issue a separate engagement letter to reflect the obligations of both parties.


If this letter correctly describes our engagement, please print and sign an original of this engagement letter, fax it to us for work to begin, and then mail the original to us for our files.







The above letter confirms our understanding of the services to be performed and the limitations of those services.


___________________________________                          _____________________

Client Name, Title                                                                                 Date

Alternative Wording:

QuickBooks Support

            The most efficient way to begin our relationship is to work from a list of questions that have been developed by «NameOfCompany».  The consulting work performed will be at your discretion and may include discussions of generally accepted accounting principles (GAAP) requirements, reading client prepared financial statements, proposing adjusting entries, and software explanations.  We will consult with you regularly as to the specifics of what services you wish for us to perform.

            By your signature below, you understand that the accounting records are solely the responsibility of «NameOfCompany».  Based on our discussions with you and with your approval, the QuickBooks data will be designed to meet your needs in managing your business.  Accordingly, our work in connection with this these statements are for management’s use only and are not intended for third-party use.  Our work in connection with this consulting engagement is not intended to result in the submission or issuance of financial statements by <FIRM> as defined by Statements of Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants.  A submission or issuance of financial statements as defined by professional standards requires that the CPA present to a client or third parties that the CPA has prepared manually or through the use of computer software.  By your signature below, you understand that the issuance of financial statements as defined above is outside the scope of this engagement.

Our engagement cannot be relied upon to disclose errors, fraud or illegal acts that may exist.  However, we will inform the appropriate level of management of any material errors that come to our attention and any fraud or illegal acts that come to our attention, unless clearly inconsequential.