This overview is not a replacement of the Standard and therefore should be used in conjunction with, and not instead of, the Standard.


APES 305 Terms of Engagement (PDF) mandates that members in public practice document and communicate the terms of engagement with their clients. Guidance is provided in respect of the general contents of an engagement document.

Scope and application

APES 305 took effect in December 2007 and was revised in June 2009, July 2013 and October 2015. The revised standard, which is effective for engagements commencing on or after 1 January 2016, requires members in public practice in Australia to comply with its mandatory requirements. For members outside of Australia the scope of APES 305 must be followed to the extent local laws and regulations are not contravened.

Terms of engagement for professional services

Members in public practice are required to document and communicate to the client the terms of engagement. It is not a requirement that the engagement document take the form of a letter. Other acceptable methods of documenting and communicating the terms of engagement are a handout, brochure, leaflet or electronic communication.

General contents of an engagement document

APES 305 discusses the general contents of an engagement document and provides guidance on matters that members in public practice may consider for inclusion in an engagement document. These matters are noted below and can be varied to meet the individual requirements and circumstances of an engagement:

  • purpose of the engagement
  • objectives of the engagement
  • scope of the engagement
  • engagement output
  • relative responsibilities of the member, the client and any third parties
  • involvement of other members in public practice
  • fees and billing arrangements
  • ownership of documents
  • confirmation by the client that the terms of the engagement document are understood.

Recurring engagements

A member in public practice may decide not to send an engagement document for recurring engagements each year unless there is a change in circumstances such as:

  • the client misunderstands the objectives and scope of the engagement
  • any significant changes in the engagement
  • any significant changes in the professional services to be provided or the terms of engagement
  • a recent change of client management or ownership
  • a significant change in the nature or size of the client’s business
  • any significant changes to professional standards or applicable accounting or auditing or assurance standards
  • any changes to legal or regulatory requirements.

Limitation of liability scheme

A member in public practice who is participating in a limitation of liability scheme is required to be familiar with the relevant professional standards legislation and related obligations. APES 305 mandates that where the member in public practice is a participant under such a scheme, the member must advise the client that the member’s liability may be limited under the scheme.

Refer to the Standard for information concerning

  • Definitions
  • Conformity with international pronouncements
  • Features of a recurring engagement