An engagement letter is a written agreement that describes the business relationship to be entered into by a client and a

company. The letter details the scope of the agreement, its terms, and costs. The purpose of an engagement letter is to set
expectations on both sides of the agreement.
One of the most important functions of an engagement letter is to define the scope of the engagement. You should be as
specific as you need to be for each individual engagement, but at a minimum, your engagement letter should detail: The
services offered. The more specific you can be, the better.
1. Identification
You should properly identify who will receive your services. It may be an individual, a group, an entity, or a portion of an
entity – it’s important to specify.
Example:
John Matthews
1027 42nd Street, Manhattan, New York City, 10036
Dear John,
This letter is to confirm our understanding of the terms of our engagement and the nature and limitations of the services
that we provide.
Ignition tips for client identification:
 Specify the client’s name with {{ client.name }}
 Include the client’s address with {{ client.address }}
 Specify the client’s preferred {{ contact.salutation }}
2. Scope of services
Scope of services is probably the most important part of the entire engagement letter. By including your scope of services
you help mitigate scope creep and guards against the client developing unreasonable expectations about the services to be
performed.
Be very clear with what your services include.
Example
Service: Ledger Conversion, Setup and Training
We will setup a brand new Xero account for the entity named above. In this setup service:
 We will create and configure your chart of accounts
 We will convert your data from your existing accounting system to bring in your historical balances, contacts,
payroll, sales and payable invoices.
Ignition tips for scope of services:
 Include a summary of the services added to the proposal with {{ proposal.service_summary }}
 Include your terms for each service added to the proposal with {{ proposal.service_terms }}
3. Period of engagement
Specify when the engagement will begin and end. You can also include expected delivery dates if there’s a specific
deliverable (ex. an audit).
Example
This engagement starts on February 1st, 2018 and is valid until February 1st, 2019. We will not deal with earlier periods
unless you specifically ask us to do so and we agree.
Ignition tips for period of engagement:
 Add a start date with {{ proposal.commencement_date }}
 Include the end date with {{ proposal.end_date }}
4. Fee structure
Detail how much and how often the client will be billed. It’s advisable to also add in what will happen should the client
request extra services not covered by the engagement letter
You may include a clause that specifies what happens in the case of late payment. It can be a late fee or suspension of
service.
Example
On Acceptance
Ledger Conversion, Setup and Training - $2,000
Monthly Recurring
Monthly Bookkeeping - $800/month
All prices are inclusive of tax.
The fee arrangement is based on the expected amount of time and the level of staff required to complete the services as
agreed. The fee excludes miscellaneous expenses which are incurred to complete the engagement.
Should the client need extra services not included in this engagement we bill at a rate of $150 per hour (subject to
approval by *practice name*).
Ignition tips for fee structure:
 Include a price summary which breaks down your services by billing type with {{ proposal.price_summary }}
 Output the total on acceptance value with {{ proposal.on_acceptance }}
 Output the total on completion value with {{ proposal.on_completion }}
 Output the total recurring amount with {{ proposal.recurring }}
 Output the total cost with {{ proposal.total_cost }}
5. Responsibilities
In most engagements, the client is responsible for specific actions and to provide certain information or records. Be
specific with what the client’s responsibilities are and state what information you are relying on the client for in order to
fulfill the service.
Example
The Client is responsible for the reliability, accuracy and completeness of the accounting records, particulars and
information provided and disclosure of all material and relevant information. Clients are required to arrange for
reasonable access by us to relevant individuals and documents, and shall be responsible for both the completeness and
accuracy of the information supplied to us. Any advice given to the Client is only an opinion based on our knowledge of
the Client's particular circumstances.
6. Professional standards
Refer the professional standards which govern the engagement. This varies depending on your location (ex. it may be
the Professional Standards Authority if you’re in the UK or the Professional Standards Council if you’re in Australia).
Example
The conduct of this engagement in accordance with the standards and ethical requirements of *insert ruling body* means
that information acquired by us in the course of the engagement is subject to strict confidentiality requirements, in
addition to our obligations under the *insert confidentiality act*.
That information will not be disclosed by us to other parties, without your express consent, except as required by law or
professional obligation.
7. Confirmation of terms
The bottom of your engagement letter should include the confirmation of terms which verifies that the client understands
the business contract.
Example
I/We hereby accept the terms of your engagement letter.
Signed:
Full name: