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Example of letter of engagement for non-audit clients


Why do practitioners need to issue letter of engagement to new clients?

It is a requirement by professional bodies such as ACCA and ICEAW for members engaging new clients to confirm their engagement in writing.

Below is an example of a letter of engagement for non-audit client. You may like to prepare separate appendixes for directors' responsibilities, accountants and tax advisers' responsibilities as these are standard documents for all engagements to shorten the length of the letter and be more presentable.

Our ref:


The Directors
Best Client Ltd
Address 1

Dear Sirs,

Best Client Limited

We refer to our appointment as accountants and tax advisers for the company. This letter is to set out the basis on which we are engaged to assist you in the preparation of the annual financial statements of Best Client Limited, and the respective responsibilities of yourself as director and ourselves as accountants and tax advisers.

Your responsibilities as Directors

As directors of the company, you are responsible for ensuring that the company maintains proper accounting records and for preparing accounts which give a true and fair view and which have been prepared in accordance with the Companies Act 1985.

In preparing the financial statements you are required to select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

You are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and for ensuring that the financial statements comply with the Act. You are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

You are also responsible for determining whether, in respect of each financial year, the company meets the conditions for exemption from an audit of the accounts set out in section 249A of the Act, and for determining whether, in respect of the year, the exemption is not available for any of the reasons set out in section 249B.

You are responsible for ensuring that the company complies with laws and regulations applicable to its activities, and for establishing arrangements designed to prevent any non-compliance with laws and regulations.

You have undertaken to make available to us, as and when required, all the company’s accounting records and related information necessary for the compilation of the financial statements.
Scope of our work

We shall compile the financial statements in accordance with Companies Act 1985 based on the accounting records maintained by you and the information and explanations provided to us. In carrying out our engagement we will make enquiries of management and undertake any procedures that we judge appropriate but are under no obligation to perform procedures that may be required for assurance engagements such as audits or reviews.

Our work will not be an audit of the financial statements in accordance with Auditing Standards. Accordingly, we shall not seek any independent evidence to support the entries in the accounting records, or to prove the existence, ownership, or valuation of assets, or the completeness of income, liabilities or disclosures in the accounts. Nor shall we assess the reasonableness of any estimates or judgements made in the preparations of the accounts. Consequently our work will not provide any assurance that the accounting records are free from materials misstatements, whether caused by fraud, other irregularities or error.

We shall report, with any variations that we consider may be necessary, that in accordance with your instructions and in order to assist you to fulfil your responsibilities, we have compiled, without carrying out an audit, the accounts from the accounting records of the company and from the information and explanations supplied to us. (Accountants’ Report).

We have a professional responsibility not to allow our name to be associated with accounts which we consider may be misleading. Therefore, although we are not required to search for such matters, should we become aware, for any reason, that the account ns may be misleading, and the ,matter cannot be dealt with by means of adjustments to the accounts, we shall withdraw from the engagement, and shall notify you in writing of the reasons.

Our responsibilities as tax advisers

We will prepare from the financial statements and other information and explanations provided by you the company’s corporation tax computations and tax returns. We will file the tax returns together with the financial statements to HM Revenue and Customs after you have approved them.

We will advise as to amounts of corporation tax to be paid and the dates by which the company should make the payments and if appropriate we will initiate repayment claims when tax appears to have been overpaid.

We will agree with the HM Revenue and Customs the company’s liability to corporation tax and attend to notices of assessment, lodging appeals against incorrect assessments as appropriated.

We will deal with all communications relating to the company’s tax return addressed to us by the HM Revenue and Customs or passed to us by the company.

We will help you in preparing the tax provisions and disclosures to be included in the company’s financial statements.

We will provide our professional services with reasonable care and skill.  However, we will not be responsible for any losses, penalties, surcharges, interest or additional tax liabilities arising from the supply by you or others of incorrect or incomplete information, or your or others’ failure to supply any appropriate information or your failure to act on our advice or respond promptly to communications from us or the tax authorities.

Please find enclosed Form 64-8 for the company, which needs to be signed and returned to us to authorise the HM Revenue and Customs to deal directly with us in connection with your tax affairs.


Our fees are computed on the basis f time spent on the company’s affairs by partners and the staff, and on the level of skills and responsibility involved. Our invoices will show separately the time cost of each category of work referred to above will be billed at appropriate intervals during the year and will be due on presentation.

If, in the circumstances of we have to withdraw engagements due to the fact the financial statements are misleading, we do not issue any report, of if it becomes necessary for us to withdraw from the engagement, our fees for the work performed up to that point will be payable by the company.

Terms of Business

Our services are provided subject to the attached terms of business which I would ask you to kindly read and then sign.

You agree that our liability to you for loss not including loss due to our fraud or wilful default as per our terms of business shall be such amount as is finally determined to have so resulted on a fair and reasonable basis by a judicial or other process but shall not exceed £ xxx,xxx or, if greater, ten times the total of fees invoiced issued under this engagement letter. (please note that legal advice may be required regarding the form of words to be included in this section of the engagement letter).

Acceptance of Engagement Letter

We shall be grateful if you would confirm in writing your engagement to the terms of this letter, or inform us if they are not in accordance with your understanding of this engagement. Your continuing instructions will amount to an acceptance of this engagement letter.

Yours faithfully,

Mr. A Wilson



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