Client engagement letters: your questions answered

You need a form of engagement document, but you don’t necessarily need customised letters. An engagement brochure meets the requirements of APES 220 Taxation Services and APES 305 Terms of Engagement. You should make sure the client acknowledges receipt.

An engagement document is a useful tool which can also be used to clearly outline the responsibilities of the practitioner and the client in relation to the engagement being performed at the start of the engagement.

It is also often called on by debt recovery agencies when attempting to recoup fees in arrears. A tax return declaration is signed at the completion of the engagement and only relates to what is in the return; for example, it does not set out your fees and charges.

You will need to insert this into your engagement letter as there is currently no standard wording in CPA Australia's templates, but this is under review.

Technically no, if the terms / scope don't significantly change. The risk is not being aware when the terms have significantly changed from what is contained in the current engagement document, such as the fee or the scope of work. If you have revised a standard engagement brochure for I-Returns, ensure that the client acknowledges receipt of the revised document.

It is also important to bear in mind that if you are only seeing an I-Return client once a year there are many things that may have changed that may impact on your engagement with them.

Provided you have an engagement letter and it’s clear what the scope of engagement is, then it is OK to agree to the two sign-off questions when adding the client to the portal.

Technically no, but specifying the fee is one of the principal reasons for having an engagement letter and is also used in the instance there is a fee dispute.

For client engagements where the scope does not change year to year, but the fee might, the engagement letter can refer to a fee schedule on your website. This must be easy to locate and reflect fees charged for the current and past periods.

No, however, the current standard engagement letter template has a clause on fees that includes pro forma text for advising clients on the circumstances under which fee arrangements may change.

Practitioners may customise this paragraph to suit their individual requirements.

Alternatively, if the increase in fees is the only change, and the change is not significant, a member may consider issuing an addendum to the current engagement document in place of advising of the fee increase.

The requirements are the same, irrespective of the format of the letter.

We will be reviewing our engagement letter templates with regard to STP and authorities to act.