ICAEW Engagement Letter Template for Accountants, Bookkeepers & Tax Advisers
Engagement letters may seem routine, but according to the Journal of Accountancy, 39% of accountancy firms that faced legal claims did not present their clients with a proper engagement letter. So, to help mitigate this, ICAEW has issued a comprehensive template designed to support accountants, bookkeepers and tax advisers with their engagement letters and minimise the risk of misunderstandings.
This article takes a look at this latest ICAEW guidance on drafting clear, compliant and effective engagement letters and provides a summary of essential steps to take to build trust and protect professional relationships.
5-Part ICAEW Engagement Letter Template
ICAEW has issued structured guidance for drafting an effective engagement letter, presented in five key segments outlined below. These segments form a comprehensive and compliant engagement letter, ensuring clarity and alignment between professional firms and their clients.
- Engagement Letter (Part 1)
- Schedules of Service(s) (Part 2)
- Additional Wordings (Part 3)
- Terms of Business (Part 4)
- Privacy Notices (Part 5)
Part 1 of the template/helpsheet provides sample engagement letter wording suitable for a range of clients, including individuals, unincorporated businesses, partnerships, limited companies registered under the Companies Act, and limited liability partnerships. However, ICAEW clarifies that this guidance is intended for best practice and does not constitute a professional standard. Professionally drafted, ready-to-use engagement letter templates aligned with applicable standards can be accessed through FigsFlow.
Here’s a look at a sample ICAEW-compliant engagement generated through FigsFlow.
Part 2 includes a series of schedules covering various professional services such as auditing, accounting, taxation, and probate work. Specific schedules address services including Trusts and Estates Tax Returns, Corporation Tax, Payroll and Tax Credits.
Part 3 presents optional additional wording intended for use in specific circumstances. These can be adapted to create supplementary schedules where necessary.
Similarly, Part 4 outlines the core terms that should be incorporated into every engagement letter. These include the scope of services, key timelines, client responsibilities, payment terms and conditions for termination by either party.
Finally, Part 5 provides a short-form privacy notice template. This includes suggested wording to explain the purpose for collecting personal data, the types of data collected and the legal basis for processing such data.
You can access this entire template at ICAEW official site.
Conclusion
The latest template issued by ICAEW provides valuable guidance for drafting engagement letters that are legally compliant and professionally effective. It serves as a useful resource for accountants, bookkeepers and tax advisers seeking to minimise legal risks and maintain regulatory compliance.
However, it is important to note that the template is intended solely for professional guidance. For those seeking a ready-to-use solution, FigsFlow offers a comprehensive alternative. The platform provides customisable engagement letters and proposals, along with automated client onboarding tools tailored to the needs of modern accounting practices.
A 30-day free trial is available at FigsFlow for firms wishing to explore these features.
Sandeep Subedi
Sandeep is a rising finance professional with a sharp eye for numbers and a passion for turning complex tax rules into simple and smart solutions. Currently pursuing an ACCA qualification, he specialises in helping businesses stay regulatorily compliant.
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