For accountants and bookkeepers
Accounting engagement letter
Accounting engagement letter, written as a priced proposal
An accounting engagement letter records what the accountant will and will not do, who is responsible for what, and the fees, so both sides can sign the same understanding. This example from a Toowoomba practice to a family machinery company sets out the year's work at $7,430 plus GST in fixed fees and is signed by both the company and a partner.
The proposal, page by page
Every page as the client sees it and as it prints, pricing table included.
The pricing, line by line
- Financial statements and company tax return
- 1 × $4,800.00
- Directors' individual tax returns
- 2 × $650.00
- ASIC annual review and company secretarial
- 1 × $450.00
- Tax planning meeting
- 1 × $880.00
- Quarterly BAS review (optional)
- 4 × $380.00
- Tax
- $743.00
- Total
- $8,173.00
Section by section
- Cover
- A contract cover with the financial year and fixed fees.
- About us
- A chartered practice and registered tax agent, with a partner signing every set of accounts.
- Understanding your needs
- A family company whose bookkeeper keeps the books, needing accounts, returns, ASIC compliance and planning before 30 June.
- Our approach
- Plan before year end, prepare and review, sign off and lodge.
- Deliverables and timeline
- Financial statements, three returns, the ASIC review and a planning summary, then four dates from May to lodgement.
- Investment
- Four fixed fees and an optional quarterly BAS review, with the one condition under which fees change.
- Terms
- Payment, scope, client and accountant responsibilities, document ownership, ending the engagement, limitation of liability and validity.
- Next steps and acceptance
- E-sign by a director, then countersigned by a partner.
Why an engagement letter and a proposal are the same document here
Accountants in public practice who are members of the Australian professional bodies must document and communicate the terms of each engagement, which is the subject of the APESB standard APES 305. Many firms send a proposal to win the work and then an engagement letter to record it. This example does both at once: the proposal sections explain the work and the fees, and the terms are the engagement terms, signed by both sides. That saves a round of paperwork and means the client signs the same terms they read when they decided. The terms cover what an engagement letter usually covers: the scope and its limits, each side's responsibilities, fees, ownership of documents, how the engagement ends and liability.
How the fees are set out
The company's financial statements and tax return are $4,800, the two directors' returns $650 each, the ASIC annual review $450 and the May planning meeting $880: $7,430 before GST, $8,173 with it. The quarterly BAS review at $380 a quarter is optional and adds $1,520. There is no deposit, so once both signatures are in, one invoice is issued for the fixed fees, payable in 14 days, which clause 1 states. The investment paragraph states the one circumstance that would change the fee, poor records, and promises to agree any extra cost first, which is the conversation clients most want to avoid having by surprise.
How to adapt this engagement letter
Check the current APES 305 requirements and your professional body's guidance before relying on this structure, and use your firm's own wording for scope limits and liability. If your firm participates in a professional standards scheme, the limitation of liability statement belongs in the terms exactly as the scheme requires; if not, remove it. List every entity covered, because a family group often has a trust or a second company that the client assumes is included. If you prepare activity statements as well as reviewing them, move that into the scope. For recurring engagements, say whether the terms continue each year until replaced.
What makes this proposal work
It says what the engagement is not
Clause 2 states that the work is not an audit and that transactions are not verified one by one, and clause 3 puts the accuracy of records with the client. Those two sentences are the ones that matter most if something later turns out to be wrong.
Fees are fixed and the exception is named
Each service has a fixed fee, $7,430 in all, and the investment paragraph names the one thing that could change it: records that need significant correction, agreed before any extra work. The client knows the price and the only way it moves.
Both sides sign the same terms
Acceptance is by e-signature with countersigning: a director signs for the company after an email code, then a partner signs. The engagement starts with one signed document that both parties hold.
Questions people ask
What is an accounting engagement letter?
A document that sets out the terms of the work an accountant does for a client: the scope, what is excluded, each side's responsibilities, fees and other terms, signed by both. APES 305 requires members in public practice to document and communicate the terms of engagement with a client. This example combines it with the proposal so the client signs once.
What should an engagement letter include?
The entities and period covered, the services and what they are not, the client's responsibility for its records, the accountant's standards, fees and how they are billed, ownership of documents, how the engagement ends, any limitation of liability, and signatures. This example includes each, with eight numbered terms after the pricing table.
Do accountants charge fixed fees for annual accounts?
Many do for a known scope. This example fixes $4,800 for the company accounts and tax return, $650 for each director's return, $450 for the ASIC review and $880 for planning, and says fees change only if the records need significant correction, with the cost agreed first.
Does an engagement letter need to be signed?
Signing makes it clear the client agreed to the terms. This one uses e-signature: a director signs for the company after confirming a code sent by email, a partner countersigns, and the signed PDF is kept with the acceptance. It also gives the firm a dated record of when the engagement started.
Is a tax return engagement an audit?
No. Preparing financial statements and tax returns from the client's records is not an audit, and the accountant does not check every transaction. This engagement letter says so in clause 2 and makes the client responsible for the accuracy of its records in clause 3, which is standard in compliance engagements.
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