The Directors 1
We are pleased to accept the instruction to act as accountants for your company and are writing to confirm the terms of
our appointment outlined below.
The purpose of this letter together with the attached terms and conditions is to set out our terms for carrying out the work and to clarify our respective responsibilities.
We are bound by the ethical requirements of the Association of Chartered Certified Accountants, and accept instructions to act for you on the basis that we will act in accordance with those ethical requirements.
1 Period of engagement
1.1 This letter is effective from ________________________________
1.2 We will deal with matters arising in respect of periods prior to the above period as appropriate.
2 Our responsibility to you
2.1 We have set out the agreed scope and objectives of your instructions within this letter of engagement. Any subsequent changes will be discussed with you and where appropriate a new letter of engagement will be agreed. We shall proceed on the basis of the instructions we have received from you and will rely on you to tell us as soon as possible if anything occurs which renders any information previously given to us as incorrect or inaccurate. We shall not be responsible for any failure to advise or comment on any matter which falls outside the specific scope of your instructions. We cannot accept any responsibility for any event, loss or situation unless it is one against which it is the expressed purpose of these instructions to provide protection.
3 Your responsibility to us
3.1 The advice that we give can only be as good as the information upon which it is based. Insofar as that information is provided by you, or by third parties with your permission, your responsibility arises as soon as possible if any circumstances or facts alter as any alteration may have a significant impact on the advice given.
If the circumstances change therefore or your needs alter, advise us of the alteration as soon as possible in
4 It is your responsibility to keep proper accounting records which disclose with reasonable accuracy at any particular time the financial position of the company. It is also your responsibility to safeguard the assets of the company and for taking reasonable steps for the prevention of and detection of fraud and other irregularities with an appropriate system of internal controls.
4.1 You are also responsible for making available to us, as and when required, all the company’s accounting records and all other relevant records and related information, including minutes of management and
4.2 You will also be responsible for:
(a) Maintaining records of all receipts and payments of cash;
(b) Maintaining records of invoices issued and received;
(c) Reconciling balances monthly/annually3
with the bank statements;
(d) Preparing details of the following at the year-end:
1) stocks and work in progress;3
2) fixed assets;3
3) amounts owing to suppliers;3
4) amounts owing by customers;3
5) accruals and prepayments; and3
6) amounts recoverable under contracts.3
4.3 Our work will not be an audit of the accounts. 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 completeness of income, liabilities or disclosure in the accounts.
4.4 As part of our normal procedures we may request you to provide written confirmation of any oral information and explanations given to us during the course of our work.
4.5 We have a professional duty to compile accounts that conform with generally accepted accounting principles.
The accounts of a limited company are required to comply with the disclosure requirements of the Companies Act 2006 and applicable accounting standards. Where we identify that the accounts do not conform to accepted accounting principles or standards we will inform you and suggest amendments to be put through the accounts before being published. We have a professional responsibility not to allow our name to be associated with accounts that may be misleading. In extreme cases, where this matter cannot be resolved, we will withdraw from the engagement and notify you in writing of the reasons.
5.1 We will not be carrying out any audit work as part of this assignment and accordingly will not verify the assets and liabilities of the company, nor the items of expenditure and income. To carry out an audit would entail additional work to comply with International Auditing Standards so that we could report on the truth and fairness of the financial statements. We would also like to emphasise that we cannot undertake to discover any shortcomings in your systems or irregularities on the part of your employees.
5.2 If an audit of the accounts is required, you will need to notify us in writing. Should our work indicate that the company is not entitled to exemption from an audit of the accounts, we will inform you. If we decide to undertake an audit assignment at your request, a separate engagement letter will be required.
6 Because rules and regulations frequently change you must ask us to confirm any advice already given if a transaction is delayed or a similar transaction is to be undertaken.
7 Fees paid by you in advance for professional work to be performed and clearly identifiable as such shall not be regarded as clients' monies.
8 Internal disputes
If we become aware of a dispute between the parties who own or are in some way involved in the ownership and management of the business, it should be noted that our client is the business and we would not provide information or services to one party without the express knowledge and permission of all parties. Unless otherwise agreed by all parties we will continue to supply information to the insert location for the attention of the insert individuals. If conflicting advice, information or instructions are received from different insert details
9 The services we undertake to perform for you will be carried out on a timescale to be determined between us on an ongoing basis.
9.1 The timing of our work will in any event be dependent on the prompt supply of all information and documentation as and when required by us.
10 Communication between us is confidential and we shall take all reasonable steps to keep confidential your information except where we are required to disclose it by law, by regulatory bodies, by our insurers or as part of an external peer review. Unless we are authorised by you to disclose information on your behalf this undertaking will apply during and after this engagement.
11. Data Protection Act 1998
We confirm that we will comply with the provisions of the Data Protection Act 1998 when processing personal data about you and your family. In order to carry out the services of this engagement and for related purposes such as updating and enhancing our client records, analysis for management purposes and statutory returns,
12 Intellectual property rights
We will retain all copyright in any document prepared by us during the course of carrying out the engagement
13 We will provide our services with reasonable care and skill. Our liability to you is limited to losses, damages, costs and expenses caused by our negligence or wilful default.
13.1 Exclusion of liability for loss caused by others
We will not be liable if such losses, penalties, surcharges, interest or additional tax liabilities are due to the acts or omissions of any other person or due to the provision to us of incomplete, misleading or false information or if they are due to a failure to act on our advice or a failure to provide us with relevant information.
14 Should we resign or be requested to resign a disengagement letter will be issued to ensure that our respective responsibilities are clear.
We shall be grateful if you could confirm your agreement to the terms of this letter by signing the enclosed copy
and returning it to us immediately.
confirm that I/we
have read and understood the contents of this letter and related terms and conditions and
agree that it accurately reflects my/our fair understanding of the services that I/we
require you to undertake.
Signed .................................................... Date ...............
For and on behalf of