The engagement letter, offered by your CPA at the start of your working relationship and whenever you authorize him to begin a new project on your behalf, fosters effective communication between the professional advisor and you. Better communication, goodwill, and understanding will be promoted through the engagement letter.
In a professional engagement, the CPA agrees, on the one hand to comply with professional and ethical standards; you, on the other hand, agree to cooperate, to render assistance, and to compensate the CPA. An Engagement Letter clarifies these mutual obligations; it insures that the CPA and staff members understand the type of engagement to be performed and the expectations they agree to fulfill.
Signing an Engagement Letter does not alter the relationship between the client and the CPA, nor does it change the obligations of either party. What the letter does is commit to writing precisely what is involved in an agreement, thereby reducing the possibility of misunderstanding later.
Read the Engagement Letter with care. Give it the same careful attention given to any significant agreement. Discuss its content with your CPA. Be sure you understand the services described, the limitations of the services, the fee arrangements, and any other significant provision. When you sign the Engagement Letter, be aware that you are accepting the terms of the agreement. Retain a copy of the signed Engagement Letter as you would any other written agreement.