Before any work begins, think about a letter of engagement.
- Do I need an engagement document?
- What happens when the client doesn’t return a signed letter of engagement?
- How much documentation do I need for a compilation engagement?
- Do I need to retain documentary evidence when the taxpayer is responsible for keeping records?
If you have ever asked yourself some of these questions about engagement documents, then you are not alone. Many accountants in practice are unsure as to the required level of documentary evidence required prior to performing an engagement, particularly for activities that are not audit and assurance related.
While the Accounting Professional and Ethical Standards specify requirements and provide guidance, CPA Australia’s Quality Review Program continues to identify some shortcomings with engagement documentation. For some members, a lack of documentary evidence has led to more serious implications in relation to their compliance with the Accounting Professional and Ethical Standards.
In a recent online chat, our expert presenters addressed questions to help you understand what is needed to comply with applicable Accounting Professional and Ethical Standards. Information was provided about where you can obtain further guidance and what happens if a member is found not to be complying with this Standard.
Key issues addressed in the live chat were:
- Who do engagement letters apply to and who to issue an engagement letter to
- Does an engagement letter need to be signed and who should sign
- Frequency of issuing an engagement letter
- When to update an engagement letter
- Usage of terms of engagement on a website
- Tax returns and client substantiation declarations
- How to disclose outsourcing work
- Does a FSG negate the need for an engagement letter
- Consequences of an inadequate engagement letter
- Document ownership issues
The transcript is available as a PDF download.
The experts were: