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Sample Engagement Letter Wording

Sample Engagement Letter Wording And other important Practice Letters Presented by: NAPLIAW W W . N A P L I A . C O M 150 Speen Street, Suite 102, Framingham, MA 01701 Tel Fax P a g e | 2 Copyright 2015 by North American Professional Liability Insurance Agency, LLC. All rights reserved. Table of Contents Description Page Blanket Disclaimer & Copyright 3 Overview 4 - 5 Sample Engagement Letter Wording Audit Engagement Wording 6 - 10 Compilation Engagement Wording 11 - 15 Review Engagement Wording 16 - 20 Tax Return (Personal) Wording 21 - 25 Tax Return (Business) Wording 26 - 30 Combined Services Audit & Tax Engagement Wording 31 - 37 Agreed Upon Procedures Engagement Wording 38 - 43 Bookkeeping Engagement Wording 43 - 47 Acceptance Agent Engagement Wording 48 - 50 Conflict of Interest Informed Consent.

Sample Alternative Dispute Resolution “ADR” Language. 58 Sample Limitation of Liability Language 59 Sample Letter to Successor Accountant. 60 - 61 Sample File Retention Policy 62 Sample SSARS. No. 21 Language 63 Sample Affordable Care Act (ACA) Confirmation Letter 67 Contributors. 69 - 71 About NAPLIA / Contact Information 72 Additional ...

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Transcription of Sample Engagement Letter Wording

1 Sample Engagement Letter Wording And other important Practice Letters Presented by: NAPLIAW W W . N A P L I A . C O M 150 Speen Street, Suite 102, Framingham, MA 01701 Tel Fax P a g e | 2 Copyright 2015 by North American Professional Liability Insurance Agency, LLC. All rights reserved. Table of Contents Description Page Blanket Disclaimer & Copyright 3 Overview 4 - 5 Sample Engagement Letter Wording Audit Engagement Wording 6 - 10 Compilation Engagement Wording 11 - 15 Review Engagement Wording 16 - 20 Tax Return (Personal) Wording 21 - 25 Tax Return (Business) Wording 26 - 30 Combined Services Audit & Tax Engagement Wording 31 - 37 Agreed Upon Procedures Engagement Wording 38 - 43 Bookkeeping Engagement Wording 43 - 47 Acceptance Agent Engagement Wording 48 - 50 Conflict of Interest Informed Consent.

2 Joint Representation 51 - 52 Sample FBAR Engagement Wording 53 Sample Disengagement Wording 54 - 55 Sample Lender Request for Verification Response 56 Negative Engagement Wording 57 Sample alternative dispute resolution ADR Language 58 Sample Limitation of Liability Language 59 Sample Letter to Successor Accountant 60 - 61 Sample File Retention Policy 62 Sample SSARS No. 21 Language 63 Sample Affordable Care Act (ACA) Confirmation Letter 67 Contributors 69 - 71 About NAPLIA / Contact Information 72 Additional Resources 73 P a g e | 3 Copyright 2015 by North American Professional Liability Insurance Agency, LLC. All rights reserved. Disclaimer & Copyright The Sample Engagement Letter Wording provided in this manual is intended as a benefit to those clients of North American Professional Liability Insurance Agency, LLC.

3 Please read the following disclaimer carefully before choosing to use any of the Sample language in your practice. The example Engagement Letter Wording in this manual is intended solely for general educational purposes. It is not intended for the purpose of providing specific legal, accounting, or other professional advice to any particular recipient or with respect to any particular jurisdiction. The authors, publisher, and distributor of this document: (1) Make no representations, warranties, or guarantees as to its technical accuracy or compliance withany law ( federal, state, or local) or professional standard; and, (2) Assume no responsibility to any recipient of this document to correct or update its contents for anyreason, including changes in any law or professional standard.

4 Before using any Engagement Letter in your practice, you should formally retain the counsel of an attorney knowledgeable as to the accounting industry, your practice, and the laws of any jurisdiction(s) within which you conduct your practice to ensure the document s maximum usefulness and compliance with applicable laws and professional standards This manual is distributed at no financial cost. The information contained within is the copyright of North American Professional Liability Insurance Agency, LLC and the contributing authors listed. Any distribution or reproduction of this material is strictly prohibited. If you have any questions please contact North American Professional Liability Insurance Agency, LLC (NAPLIA) at 1-866-262-7542 P a g e | 4 Copyright 2015 by North American Professional Liability Insurance Agency, LLC.

5 All rights reserved. Overview Engagement Letters provide you with essential protective Wording for your practice. In addition, they allow you the opportunity to market additional services and ultimately create a stronger relationship with your clients. Engagement letters should be utilized for all services and include: Outline scope of services Clarify all timelines Disclose all fees Include services not provided Include mediation languageEngagement Letters are Essential to your Practice As the title implies, you should truly consider Engagement letters essential to every service that you provide. This is regardless of the extent of the service or the length of time that you have known the client.

6 Protective Wording A good percentage of professional liability claims arise because the client assumed the accountant was providing a greater breadth of services than they were actually engaged to perform. A thorough Engagement Letter can provide a defense in responding to such an allegation. This is also why Engagement letters should not only include those services for which you have been engaged, but outline those services that you are specifically not providing. Marketing In defining what services you are not providing, you open the door to suggest further services that you can provide your client. While protecting yourself, you are effectively marketing your services.

7 P a g e | 5 Copyright 2015 by North American Professional Liability Insurance Agency, LLC. All rights reserved. Satisfied Clients Many Accountants fear using Engagement letters will alienate long-standing clients, or are over complicated for simple engagements. In reality, clients will be most satisfied when their expectations are based on a clear understanding of the services they are receiving. Client concerns should not be an excuse for protecting your practice. Read the section on negative Engagement letters relevant to your individual tax clients. Mediation Each of your Engagement letters should include a mediation clause. The cost to mediate a client disagreement tends to be significantly less than litigation.

8 This will mitigate the potential severity of any claims that do arise and can be effective in maintaining client relationships when unfortunate scenarios do arise. Limitation of Liability A limitation of liability provision and a consequential damage provision within your Engagement Letter may not always be enforceable. They none the less offer several benefits. Namely, they are enforceable in many instances and courts are accepting them with more frequency of late. See, Creative Playthings Franchising, Corp v. James A. Reiser, Jr., 463 Mass. 758 (2012). In addition, an accepted limitation provision should act as a deterrent in pursuing litigation when a client or plaintiff attorney understands that challenging the enforceability is an obstacle to pursuing a case.

9 Overall, Engagement letters are essential in creating a paper trail for the potential defense of any discrepancy with your clients. They should be utilized in all possible instances and considered a positive step in protecting your practice and creating client satisfaction. P a g e | 6 Copyright 2015 by North American Professional Liability Insurance Agency, LLC. All rights reserved. Example Audit Engagement Letter [Date] [Client Contact] [Client Name] [Client Address] Dear [Client Contact]: This Letter is to confirm our understanding of the terms and objectives of our Engagement and the nature and limitations of the services we will provide. We will audit the consolidated balance sheet of [Client Name] as of [Date], and the related consolidated statements of operations, retained earnings (deficit), and cash flows for the year then ended.

10 The objective of our audit is the expression of an opinion about whether your consolidated financial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our audit will be conducted in accordance with auditing standards generally accepted in the United States and will include tests of your accounting records and other procedures we consider necessary to enable us to express such an opinion. If our opinion is other than unqualified, we will discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed an opinion, we may decline to express an opinion or to issue a report as a result of this Engagement .


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