Now that we know what to include and why, here’s a typical engagement letter example. If the scope of services or anything else changes during the year, the letter must be reissued. They also specify what to do if there are likely to be any additional costs involved.

Part 3: Common Mistakes to Avoid

Another way to help implement engagement letters more efficiently is by using a standard terms-and-conditions addendum. This is a set of standard, firmwide terms and conditions that are updated periodically and attached as an addendum to every engagement letter issued by the firm. Standard terms and conditions apply to all engagements and give the firm and the client the benefit of a single understanding addressing the key contractual elements of the relationship. Engagement letters are an indispensable part of professional services. They provide clarity, protect the interests of both parties, and establish a solid foundation for collaboration.

Real estate agencies are another service startup type that utilizes this type of agreement. At Mango Practice Management we are inspired to provide the best practice management software for CPAs, consultants, accounting professionals, and other businesses. Clearly outline any potential conflicts of interest, fees, payment schedules, and other crucial terms. When in doubt, lean towards over-communication to avoid any ambiguities. Having all of the essential “need to know” stuff in one simple engagement letter is the way to go.

What is an Engagement Letter?

In any instance where you need to formalize an agreement with a client, you should use an engagement letter. In other words – if you’re at risk of being held liable for something, it’s a good idea to have an engagement letter capitalized cost in place. It’s best not to leave this open-ended or up to interpretation; be as specific and clear as possible. Although you’ve already discussed the details of your agreement with the client, the executive summary puts it all in writing.

1. Engagement letters are binding agreements and any ambiguity can have legal implications.
2. Engagement letters establish clear expectations and boundaries between clients and accountants.
3. If you choose to use templates for your engagement letters, make sure you leave blank fields in all the places that will be unique to each engagement.
4. Ms. Marshall concentrates her practice on the needs of individuals, entrepreneurs and small to medium sized businesses.

Prevents scope creep

Without a written record, either party could decide to change the terms. Also, make sure the document is concise and to the point – don’t include any unnecessary information. Client testimonials and other marketing materials should be saved for value propositions.

Can I use ‘negative assurance’ engagement letters or multiyear engagement letters?

If you don’t answer these questions upfront, they’ll be answered for you (and in a way that you might not like) when the time comes. Chris is a content manager for Canopy, joining the team with a combined eight years of experience as a copywriter, editor-in-chief, and content marketer. He’s a skilled wordsmith and strategic thinker who shapes brand identity through compelling content and fosters a collaborative and innovative environment. With a passion for storytelling and a dedication to excellence, he is a driving force behind any company’s success in content marketing. Both sides can collaborate inside the document, with real-time access to comments, approvals, and version tracking.

Unless you clearly state when you expect the work to be completed, there’s a good chance that your client will expect the deliverables to be completed sooner than you anticipated. You then risk disappointing your client, or worse – attracting a poor review. Your exec summary is much easier to write once you’ve completed the other sections; after all, it’s just a condensed version of the letter. Feel free to complete the document first and then return to the executive summary. Consultants usually don’t have the protection of a larger organization; they’re on their own and need to make sure that the terms of any agreement are spelled out in detail.