We know that even some of the most successful, forward-thinking accounting firms we speak to are behind on issuing their Letters of Engagement. Legacy clients can easily slip years out of date.
But in this current climate, the frequency and nature of updates to legislation means having an up-to-date engagement letter issued to every client is more important than ever.
Why are Engagement Letters so important?
Here are some recurring key areas you should consider when drawing up every Letter of Engagement.
Advice beyond your scope of work
If, for example, you’ve been appointed to work with your client on tax returns, but become involved in helping them with VAT and capital gains tax, you run the risk of being liable of providing incorrect advice. Your Letter of Engagement should stipulate what will happen if their instructions change.
Of course, we don’t advise completing work outside of the scope you’ve agreed. If you do find scope creeping, explain to your client that they’ve been underquoted and you need to review their services.
Liability for 3rd party advice
You must ensure you have a clause to state that you’re not liable for advice a client takes from a third party, such as a financial adviser, even if you have recommended them. The ACCA often see claims in which accountants are brought into on account of advice they didn’t provide.
Potential for miscommunication
Arguably the most common contributing factor in claims against accountants boils down to a lack of communication. Failure to clarify who has the authority to give instructions and by what methods, or lack of definition over who is responsible for making bank changes are common themes that arise due to poor communication.
If a client decides to withdraw from your services before the end of the financial year, they might ask for a refund on monthly fees because ‘you haven’t done any work for them yet.’ Jo Wood shared with us her experience of this exact scenario. Luckily, the engagement letter template she used through OverSuite® specified that her company don’t do refunds. It meant she could ‘sleep at night’ knowing she was protected.
Why is something so important, often so easily left at the bottom of your to do list?
We know that the months roll around fast. Before you know it, it’s month end, then year-end. And with everything else on your plate, sending out up to date engagement letters feels like the least of your priorities.
They’re labour intensive, involving checks with your governing body to ensure they are up to speed with current protocol.
Even if you use templates off the internet, every single one needs to be bespoke to the client’s specific services.
It feels like a lot of work for little reward. But the thing about compliance is, it doesn’t matter until it matters. The peace of mind knowing that you’ve protected your business, reputation and career can be priceless. And it isn’t as great a task as you might think.
How we’ve made engagement letters easier for you
With OverSuite, you can build smart engagement letters to build out your own library in record time. Our standard package has over 60 service schedules, developed by experts at the forefront of compliance and risk management. We review them constantly, making sure they’re up to date with industry standards so you don’t have to.
What’s more, OverSuite users are now able to send standalone engagement letters to clients, without sending a new proposal every time, so you can easily bring clients up to date in cases where a proposal wouldn’t be appropriate.
Reviewing fees is still at the heart of our pricing philosophy, and this will never change. We still recommend all our members conduct regular fee reviews to ensure they are remaining profitable, and their clients are paying for the value they provide.
Hear how you can benefit from OverSuite’s most recent update and send Letters of Engagement without a proposal…