Engagement letter update

Before accountants can get down to the business of providing service to clients, we have to issue what’s known in the biz as an “engagement letter.” Contrary to what I’d initially thought, this doesn’t tie me down to any one person for the rest of my life, for better or worse, in good times and bad.

What it does is provide in writing the services agreed to by both parties in case anything goes wrong over the duration of the letter. My firm requires new engagement letters every three years. It spells out the services to be provided and the liability assumed by each party. This basically involves reminding the client it is all theirs (liability for the statements).

Which is what brings me to the point of the post – most clients don’t like the wording of the engagement letter, and I don’t really blame them. They hire us to perform some work and the first communication we send them basically says “can’t be held responsible.” Reminds me of The Freshmen by The Verve Pipe.

Dennis, at AccMan, has come up with a much better engagement letter template in a recent post on his blog. I like it because it’s plain English and it doesn’t make the accountants sound like we’re washing our hands of the client before we’ve even started getting them dirty.

Should the engagement letter be updated and translated into a more understandable English? Is it even possible, given its nature as a legal document?