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Terms of engagement: sample documents released
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A new standard from the Accounting and Ethical Professional Standards Board (APESB) became effective on Tuesday, 1 July 2008. APES 305 Terms of Engagement makes it mandatory for Chartered Accountants to document and communicate the terms of an engagement to a client, for engagements commencing on or after Tuesday, 1 July 2008. 
 
Guidance for members 
The Institute has published sample documentation that can help members comply with the standard:

 
The Institute provides more guidance on engagements in its free quality control guide and its free dispute resolution toolkit.  
 
How does the standard differ from the previous requirements? 
Terms of engagement were previously dealt with in Miscellaneous Professional Statement APS 2. That statement required that there be a clear understanding between the member and the client as to the terms of the engagement. APES 305 now requires that the terms of the engagement be documented in an engagement document and communicated to the client.  
 
What constitutes an ‘engagement document’? 
An ‘engagement document’ does not necessarily have to consist of a formal letter. The standard leaves the possibility open for handouts, brochures, leaflets or email as the mechanism for documenting the terms of an engagement.  
 
What is contained in the standard? 
The standard includes mandatory requirements and guidance on the general contents of an engagement letter, plus provisions relating to recurring engagements and limitation of liability disclosure.  
 
Relevant links 
 
Last updated: Thursday, 14 August 2008