An Agreement Between a CPA and Her Client is Called an Engagement Letter
As a Certified Public Accountant (CPA), your relationship with your clients is essential for the success of your practice. To ensure that both parties are on the same page regarding the services to be provided and the fees to be charged, it`s crucial to have an engagement letter in place.
An engagement letter is a formal agreement between a CPA and her client. It outlines the terms and conditions of the services to be provided, the nature of the engagement, the responsibilities of each party, and the fees to be charged. It also serves as a record of the agreement, which can be used as evidence in case of any disputes.
As a CPA, you must have an engagement letter in place before starting any work for a client, regardless of their size or the complexity of the work. The engagement letter should be tailored to the specific needs of the client and the services to be provided.
The engagement letter should include the following information:
1. Services to be provided: This section should outline the services to be provided by the CPA. It should be specific and detailed to avoid any misunderstandings.
2. Client responsibilities: This section should outline the client`s responsibilities, including providing accurate and timely information, responding to requests for information, and making timely payments.
3. CPA responsibilities: This section should outline the CPA`s responsibilities, including maintaining independence and objectivity, keeping the client`s information confidential, and providing the services with due care.
4. Fees: This section should outline the fees to be charged for the services. It should specify the basis of the fee (hourly, fixed, or contingent), the payment terms, and any additional expenses that will be charged.
5. Limitations of liability: This section should outline the CPA`s liability limitations in case of any errors or omissions.
6. Termination: This section should outline the conditions under which the engagement can be terminated by either party.
7. Governing law: This section should specify the governing law of the engagement and the jurisdiction in case of any disputes.
In conclusion, an engagement letter is a critical document that protects both the CPA and her client. It ensures that both parties are clear on the terms and conditions of the services to be provided and the fees to be charged. As a CPA, it`s essential to have an engagement letter in place for each client engagement, regardless of their size or the complexity of the work.