An engagement letter turns a handshake into a defined professional relationship: what your firm will do, what it won’t, what it costs, and who is responsible for what. For a CPA or accounting firm, it’s the best protection against scope creep, fee disputes, and a client mistaking a compilation for an audit, and many professional bodies require or strongly recommend one before work begins.
The template below is a complete CPA engagement letter for general accounting services, built for the most common arrangement: monthly accounting plus annual financial statements, with an optional advisory add-on. If your engagement is a different service line, start from the broader engagement letter template instead.
The CPA engagement letter template
[Your firm letterhead]
[Date]
[Client name] [Client address]
Re: Engagement for accounting services
Dear [Client name],
Thank you for engaging [Your Firm Name]. This letter confirms the terms on which we will provide accounting services to [Client / entity name]. Please review it, then sign and return a copy to confirm your acceptance.
Scope of Services. Monthly, we will oversee the processing of transactions in your accounting system and prepare monthly management reports, delivered by the [15th] of the following month. Annually, we will compile financial statements for [Client / entity name], comprising a balance sheet, an income statement, and any required notes. A compilation presents financial information in the form of financial statements without expressing an opinion or providing any assurance on them. It is not an audit or a review, and it cannot be relied on to detect errors or fraud.
[Optional advisory services: we will also meet [quarterly] to review your financial results, assist with cash flow forecasts and budgets, and provide ad-hoc guidance by phone or email, up to [X] hours per month.]
Services Not Included. This engagement does not include audit or other assurance work, the preparation or filing of income tax returns with the [IRS / ATO / HMRC / IRD / CRA], [sales tax / BAS / VAT / GST] filings, or legal or investment advice, unless listed above. We are happy to quote for additional services on request.
Fees. Our fee is $[amount] per month for the monthly services described above, plus $[amount] for the annual financial statement compilation, invoiced [monthly in advance / on completion]. Work outside this scope is charged at $[amount] per hour and will be quoted and agreed with you before it begins. Invoices are payable within [14] days.
Your Responsibilities. You are responsible for the accuracy and completeness of the underlying records and information you provide, for maintaining adequate internal controls, and for all management decisions. Our work relies on that information without independent verification, and timely delivery of our services depends on receiving what we need by [the 5th of each month].
Term and Termination. This engagement is ongoing and continues until terminated by either party with [30] days’ written notice. On termination, fees for work performed to the termination date remain payable, and we will make your records available for return within [number] business days.
Confidentiality. We will keep your information confidential and will not disclose it to any third party without your consent, except as required by law or professional standards.
Limitation of Liability. To the maximum extent permitted by law, our total liability arising from this engagement is limited to [the fees paid in the twelve months preceding the claim / $[amount]]. We are not liable for losses arising from incomplete or inaccurate information provided to us.
Acceptance. If these terms reflect your understanding of the engagement, please sign and return a copy of this letter.
Sincerely,
Signature: ______________________ [Name], CPA [Title], [Your Firm Name] Date: [Date]
Agreed and accepted:
Signature: ______________________ Name: [Client name] Title: [Title] Date: [Date]
What to include in an accounting engagement letter
Whether you call it a CPA engagement letter or an accounting services engagement letter, the core sections are the same:
- The parties, the entity the work covers, and the effective date
- Scope of services: exactly which accounting services are included and how often they’re delivered
- Compilation wording where it applies: no opinion, no assurance, not an audit or review
- Services not included: audit work, tax returns, and anything you’d quote separately
- Fees: the monthly fee, the annual accounts fee, and the hourly rate for extra work
- Client responsibilities: complete and accurate records, timely information, management decisions
- Term, termination notice, confidentiality, and limitation of liability
- Signature blocks for both parties
How to use this template
Fill in the bracketed fields, delete the optional advisory paragraph if you’re not offering it, and adapt the tax and filing references to your region. Have the final letter reviewed under your professional standards before you send it, particularly the compilation and liability wording. Or answer a few questions in the engagement letter generator and it assembles the letter for your region, services, and fee structure.
Send engagement letters for signature in Tidyflow
In Tidyflow, proposals and engagement letters live alongside the client’s work: build the letter with your scope and fees, send it for electronic signature, and get it back with a timestamped audit trail. The signed letter is stored on the client’s file, so the terms are always one click away when scope questions come up.