CPA Engagement Letter Checklist
What US accounting firms typically cover in an engagement letter, section by section.
An engagement letter sets out the agreed scope of services, who is responsible for what, the fees and the timing between an accounting firm and its client. This checklist covers the sections US firms usually include, from parties and scope through to fees, records, changes in scope and acceptance.
Last updated: September 16, 2026 · Reviewed by Waqas Sagar, ACA FCCA, chartered accountant (UK) and founder of Remindoo.
1. Parties and engagement date
Name the firm and the client exactly as they are legally constituted, including the entity type, and state the date the engagement begins. Where the client is an entity whose owners also become clients, say whether their personal returns are covered here or in a separate letter.
- Full legal name of the firm
- Full legal name and entity type of the client
- Engagement start date and period covered
- Whether related entities or individuals are included
2. Services included (scope)
Describe the work in specific terms — the return, the period, the standard applied. A scope written as a list of deliverables is far easier to defend than one written as a description of a relationship.
- Each service and the period it covers
- The standard or basis applied to the work
- Deliverables the client will receive
- Any service tiers or optional add-ons agreed
3. Services excluded
State plainly what the engagement does not cover. Exclusions do more work than inclusions when a disagreement arises months later.
- Services expressly not provided
- Representation in examinations or disputes, if excluded
- Prior period work or cleanup, if excluded
- Any advice the client should seek elsewhere
4. Client responsibilities
The most common cause of a late filing is late information. Put the client's obligations in writing and attach dates to them.
- Providing complete and accurate information
- The date by which records must be supplied
- Responsibility for the accuracy of underlying records
- Management responsibility for the financial statements, where relevant
- Prompt responses to queries
5. Firm responsibilities and limitations
Set out what the firm will do and the limits of the engagement, including that the work is not designed to detect fraud or error unless it expressly is.
- What the firm will perform
- Limits of the engagement
- Reliance on information provided
- Any limitation of liability your counsel advises
6. Fees, billing frequency and payment terms
State the fee, when it is billed, what triggers additional fees, and what happens if an invoice goes unpaid.
- Fee per service and how it is calculated
- Billing frequency
- Out-of-scope work and how it is charged
- Payment terms and late payment consequences
- Expenses and third-party costs
7. Timeline and key dates
Tie the firm's delivery commitment to the date the client's records arrive, rather than to the calendar alone.
- Date records are due from the client
- Target delivery or filing dates
- Consequences of late information, including extensions
8. Communication and document exchange
Say how you will exchange documents and who is authorized to give instructions.
- Approved channels for documents
- Named contacts and who can approve work
- Position on email and unencrypted transmission
9. Records and retention
Set out who keeps what, for how long, and what the client receives at the end of the engagement.
- Ownership of workpapers and client records
- Retention period
- What is returned on termination
10. Changes in scope and additional work
Define how additional work is agreed, so that a verbal request does not become unbilled work.
- How scope changes are requested and approved
- Whether a new letter or an addendum is required
- How additional fees are agreed
11. Termination
State how either party ends the engagement, with notice and the treatment of work in progress.
- Notice required from either party
- Fees for work in progress
- Handover and return of records
12. Signatures and acceptance
Identify who has authority to sign and record the date of acceptance before work begins.
- Signatory with authority to bind the client
- Firm signatory
- Date of acceptance
- A copy retained on the client record
Sources to check
- AICPA & CIMA guidance on engagement letters, including the SSARS requirement for a written engagement letter in preparation, compilation and review engagements (AR-C sections 70, 80 and 90).
- IRS guidance for tax professionals, where the engagement involves federal tax matters.
- Your firm's own professional liability carrier, which will usually provide sample wording and required clauses.
This checklist is general information for US accounting firms and is not legal advice. Confirm engagement terms with your legal counsel and professional liability carrier.
Frequently asked questions
Is an engagement letter required for tax preparation?
For preparation, compilation and review engagements, AICPA standards (SSARS, AR-C 70, 80 and 90) require a written engagement letter agreed with management. For tax preparation the position is driven less by a single rule and more by professional standards and your liability carrier's requirements, which commonly expect a signed letter. Confirm your obligations with counsel and your carrier.
How often should engagement letters be renewed?
Most firms renew annually, usually in the fall before busy season, so the scope and fee for the coming year are agreed before work begins. Recurring service clients are often renewed on the anniversary of the engagement instead. Renew earlier than that whenever the scope, the fee or the entity itself changes materially.
What's the difference between a proposal and an engagement letter?
A proposal is the offer: the services you are recommending and the fee you are quoting, written to help the prospect decide. The engagement letter is the agreement: scope, responsibilities, fees, timing and terms, signed by both parties. In practice many firms send them together, with the proposal as the readable front and the letter as the terms behind it.
Should bookkeeping clients get an engagement letter?
Yes. Recurring bookkeeping engagements carry the highest risk of scope creep because the work is continuous and the client's expectations shift gradually. A letter that states the monthly deliverables, what falls outside them, the client's responsibility for source records and how cleanup work is billed prevents most of those disputes.
Who should sign the engagement letter?
Someone with authority to bind the client — an owner, an officer, or a director, depending on the entity — and a signatory for the firm. For an individual engagement covering a married couple filing jointly, firms commonly ask both individuals to sign. Record the date of acceptance and keep the signed copy on the client record.
What happens if scope changes mid-engagement?
Agree the change in writing before the work is done. Depending on the size of the change firms either issue an addendum referencing the original letter or issue a new letter for the additional engagement. Both approaches work; what fails is performing the extra work first and raising the fee afterwards.
Once your letter is ready, send and track it in Remindoo.