Add Accounting Services Proposal Template eSignature with airSlate SignNow

Form 1: Engagement Letter Between Accountant and Client - reca

I want to talk about engagement letters but I want to start telling you a little story about how I first sort of changed my mindset around what an engagement letter was I went to see a local attorney and this was like five years ago and I asked him hey John help me figure something out my my bill up my receivables are getting out of control my clients are asking me to do stuff that we didn't previously agreed upon people are expecting things to be done faster than what we talked about you know it looks and feels that I need a good engagement letter so so he says okay sure let's sit down and let's go through a couple of things and he takes out a questionnaire and he start asking me about my marketing and my branding and my reputation and my certifications and my capacity and my infrastructure and I'm stop him and say wait a second you know I'm sure I just need an engagement letter why you asking me all this and then John tells me doctor I can take out an engagement letter from my library slap your business name on it charge you five hundred bucks and call it a day you want that you know obviously made me think I was like well you know now that you're putting it that way of course it doesn't seem that that's what I want so let's go let's try this exercise so we went through this concept of actually looking at everything that I do in terms of external factors like my marketing my branding how people perceive my company the reputation and we wrote all the stuff down and then we looked our internal factors like our capabilities our skills our capacity our infrastructure you know what technology do we have my staff the authority or certifications you know - EPA am I this am i dad and then once we spell all that stuff out then we had a roadmap to understanding you know how are we going to approach an engagement letter so this is sort of the intro and I want to kind of get your head I'm thinking about that an engagement letter is not just about wording on a paper it's not just a contract there's a lot of sentiments felt during an engagement and client onboarding process and the language at that engagement letter needs to speak strongly about what your company is what it delivers why stands forth what you will do what you won't do and all the other stuff around so let's talk about the steps for building your own engagement letter and and I have to make a disclaimer I'm not an attorney and this is going to be recorded so many people are gonna watch this I'm not giving legal advice and I am NOT also I'm not also advocating that your engagement letter should be one way or it should be a different way I am basically going to show you the experience that I went through and also some of the things that I asked Michelle that she gave me some some feedback on and maybe this will help you draft your own engagement letter from scratch using bits and pieces from other engagement letters are out there and then finally once you have what you think is a really good a really good engagement letter then you go to your attorney and then you ask him hey you know is this ready this is good what what do you see um so first of all determine your pricing philosophy is one of the most important things a lot of people don't think that whether you are value pricing or a fixed pricing or a blended of the two or hourly it doesn't it doesn't matter and that is not that's not that's not true pricing evokes all sorts of feelings for your customers it evokes all sort of all sorts of perceptions about value about how you do how you work how you are respected in the industry how you know how you value yourself in terms of percent in your services so so your pricing philosophy is this in my opinion is the single most important piece and we're going to spend some time talking about pricing philosophy and the different philosophies or methods that are out there then we're going to talk about the scope of work and specifically talking about what's included and what needs to be excluded and what type of language we should be using or examples of language that we should be using in terms of that and then lastly all the other conditions right so things like disclaimers that the financial statements are not audits requirements you know what are the basic requirements that you need in order to perform the work what documentation you need from your clients a lot of times we don't include or I don't anymore but I remember a couple years ago we don't include a long list of documentation that we need from our clients because it's sort of implied in the conversation that yes of course I need bank statements of course I need check images of course I need deposit images but what happens is if we don't put it in there and writing then the clients can always take advantage of the fact that we didn't complete or we completed it wrong because we don't have anything to go back to so ultimately I think that your engagement letter not only protects you as an accountant doing the service with your client it also sets the pace about how the relationship it will be from that point forward okay so let's start with talking about pricing philosophy so there's there's for pricing philosophies that I know of which is gonna be our Lea pricing or hourly fee value billing fixed pricing and value pricing and I'm gonna kind of break them all down so we can kind of figure out where where you stand in there before I do that let me do a quick polling question I would love to know how people currently think about engagement letter process so let me talk about hourly fees and this is interesting again I'm not making a case for hourly fees and I'm not making a case for a value pricing I'm just explaining what I've done in terms of research okay so single rate is when we take one one rate let's say it's a hundred dollars whatever it is it doesn't matter who in the staff does what type of work that's the rate that gets built then we have the multiple rate strategy where we actually define different skill sets or different services or specific employees or staff within the firm and we define different rates and then we actually notify the client when we do our timesheets that you know X amount of hours was by you know a junior bookkeeper and X amount of hours was up by a senior accountant or something like that and then that would have this crazy thing called the blended rate and the blended rate is is kind of interesting what people normally do is they take so the client doesn't get this this multi-layer pricing they take the pricing of the lowest end individual and let's say for example there are June bookkeeper let's say that's $40 an hour then they get the rate of the next level person let's say it's a senior bookkeeper that does adjustments and reconciliation and stuff like that and then they take the rate of the of the most senior level let's say the accountant the one that actually makes the accounting adjustments and actually makes the tax entries and stuff like that and then they multiply all those rates times the percentage of time they typically take on a project and they come up with something called the blended rate now again some people use this I'm not advocating for it or against it I'm just talking about how it different people use different different rate strategies now value bailing fixed pricing and value pricing or three that are often confused and I think it's important to define all three because they are different so value building means that there's sort of an implicit relationship with the client and a high level of trust and the client kind of trust that at the end of the engagement or at the end of the project you're gonna give him a price that is fair right and the issue with value building is there's tons of subjectiveness there's always somebody saying you know what just charge you're made hundred you know what just charge about thousand and and and and what however that person is feeling at the moment and whatever their perception is of what the client is willing to pay because of their value we provided that's how the prices are set typically with value billing there's not much upfront pricing and there's not much fixed pricing okay now fixed pricing is a little bit different fixed pricing is when you take sort of a menu style price sheet where you say a package a package B package C and then you create this sort of specific areas where it says look if your client a that means you have between two and three bank accounts and you have between 3 and 400 bank transactions a month and therefore we're going to give you this price so fixed price means I'm trying to fit every client into a box that way they when they shop for services it's kind of like a menu right they're picking of menu and then value pricing it's probably the most complex one of them all this value pricing is not the same thing as fixed pricing value pricing means that we stop and have a long deep conversation with a client about what their needs are how the valuer service is how we can possibly take care of everything that they need and then set the price upfront and typically job completion and satisfaction is guaranteed so it's very difficult to value price something and get paid partially right because value price is typically implicit that you're gonna complete the work and then the satisfaction is 100% guaranteed so that's kind of the breakdown of the three now in terms of our comparison I think it's interesting to compare them group them in this way fixed price and value building how they're different is you know fixed pricing typically works with a good better best package and the problem with fixed pricing is you're gonna have some engagements are going to be unprofitable and some engagements will be profitable so fixed pricing what typically does is it works off the numbers and statistics right with some you make with some you lose right with some of them we we give them a fixed price but we didn't know exactly what was gonna happen and then we ended up spending more time and then we lose money on it oh it's fixed pricing the client ended up being really easy and then over time is becoming even easier and then we're making money on it now the problem with fixed pricing is it requires a consistent periodic revision and then it's very difficult to make changes of pricing over time because the client already has this expectation of a fixed pricing now a value billing it's a little bit different value billing it's again there's a rate there's a there's a relationship that's implicit clients are typically okay with with pricing increasing time to time as long as it's within sort of you know inflation rate and but if you if you're going to make a change between you know doing a quarter at six hundred dollars and then doing another quarter for like a thousand bucks clients typically get a huge shock because you know it's very subjective we Came we came up with that number at the end of the of the of the project so that's kind of I would say that's also sort of the disadvantages of doing that now hourly fees and value pricing these are the two that get pinned against a very very you very often and typically when we're in an hourly fee engagement we deal with an engagement letter right that's tip that's a typical term used for an hourly fee engagement but when we do value pricing we typically call it fixed price agreement because the word engagement it's implicit that there's a time running that there's a deposit or a or a or a retainer so so the thing about hourly fees is that most accountants or service professionals like it because it protects the service professional from the downside so by a client agreeing to pay you by the hour you're protected of not waste of not wasting time with on billable time right so everything that you do in terms of time you can get paid for that's why accountants like hourly fees and quite frankly there's many projects I still do hourly I just can't find a way of value pricing them so so there's predictability on profitability right profitability on hourly fees are very predictable especially when you do multiple rates when you do the low end rate and the high end great because you could tie their time Logs with with the billing very tightly now value pricing it's gaining traction a lot of a lot of clients are not used to this like they get very confused when we say no don't worry about it we're going to give you a fixed price or something like that and that's your the key thing when you when you when you say value pricing don't tell your client we're gonna value price it because it's confusing just tell the client is gonna be a fixed price the word fixed price needs to be the terminology you use don't use value price that's just confusing anyway now with value pricing the billing process is predictable right it cuz because we already predetermined that we know exactly how much we're gonna do it and for the client's perspective it's really great because they know how much they're gonna pay exactly now the major challenge where value pricing I've had is being able to find out my profitability without timesheets and with clients that take advantage of this will do everything for you type of service it's very unpredictable to know if we're gonna be running out of time so so time management project management is it's it's a much more important piece than timesheet management when we comes to value pricing anyway so how how this comes together in terms of an engagement letter is to to to understand what the clients prefer what the accountants perception is and what the clients perception is therefore when you when you word something in an engagement letter when you use a language you have to make sure that you're both protecting yourself as an accountant and also not viewing the client away so what what are the reasons why value pricing it's still a preferred choice probably by the majority of people it's because we with with let's not with value pricing so wipe why accountants like value pricing because as we get better and faster and more skilled we don't lose our capacity to charge more as a matter of fact with hourly fees as we get faster we actually make less money so that's a big issue the other reason why people like value pricing is no burdening on timesheets because one of the principles of value pricing is no more timesheets no more profitability management for projects and also you can justify a higher overall billing rate and we're talking about from a far away view because the client is typically willing to pay a premium for a guarantee for a guaranteed outcome now why people still like hourly fees and then like I said I have many projects that are iffy it's because sometimes I'm just afraid of changing a traditional system and I know hourly fee just fits better with a particular client sometimes I like to calculate job by job profit abilities as an accountant I'm sort of mired in that concept so sometimes I want to know if I made too money on that and sometimes I need to do it to justify that an employee is is not working to power or maybe use it as a tool to push that employee into working faster and I've also sometimes I prefer hourly fees because I'm afraid of being burnt by poorly priced engagement this is what we call downside protection hourly fees protects the accountant on the downside of getting lost on a poorly priced project and value pricing protects the customer you know it to paying a maximum amount so so it's an interesting piece to understand that both of these are sort of in conflict with each other now why do clients prefer value pricing because there's a perception that the accounting professional is aligned to their needs and it's not just trying to run a clock as I mentioned upside protection and guaranteed outcome now why do some clients prefer hourly fees and trust me I have many clients that prefer hourly fees because a lot of clients have the hope cross their fingers that the hour and the time that I will take you to do it hourly it's gonna be under that premium the priced fixed engagement and and that hope that it will take less time gives them the perception that the lower over there's going to be a lower overall overall cost okay all right so arguments for hourly fees this will be the last one on pricing is both accounting professional and client have one thing in common that the perception of time is typically an equitable resource so the constraining resource of time is something that both people understand very clearly this is why it's so easy to say an hourly fee and it's so easy for the clients to immediately ask for an hourly fee but where's the arguments for value pricing is that we don't really want to spend time and in charge we want to provide solutions and we want to maximize what we can get from our client while we want the client to maximize what they feel they can get from us now let me switch over to some of the exact external factors that I talked about that that changes how we onboard a client and ultimately the type of language that we use in a in an engagement letter so you're the marketing and branding that you set sets a lot of expectation about quality and price the clients perception of value it's going to strictly it's going to change heavily how you set your price and in an engagement letter when you have a price that you feel is you you're sort of afraid of it you're sending the engagement letter but it looks like a high price especially if it's a value price or a fixed price you know you think about all the marketing and all the branding that you've done to get the client to the point where you're in that table setting the price and you you could always go down from a price but it's hard to go up right so if you want to negotiate with the client afterwards and we can have a whole nother session about discounts but let's not talk about discounts if you want to negotiate some trade-offs then you start with the highest price that includes everything so that we make up my first tip the second thing is how you present your services so how you spell out what you're in what your scope of work is what you will do how you will do it and when you will not do it such an expectation about your skills capabilities and outcome right and that's gonna be tied to the price timeframe listen a lot of people a lot of professionals even myself we run into the issue of where the client wants something by a week from now or they wanted two weeks from now versus the client that once at a month from now there has to be there has to be a relationship between the expectations of timeframe and capacity because if a client comes to you on April 10th and they want this very very big project to be done by April 15th at a time that you're super super ultra busy you know there has to be a huge price premium on it and you're an inner engagement letter spell out that we're guaranteeing it by this date and and make sure that your price includes that so that's another important pieces about setting up a price and the language in an engagement letter the other piece is client involvement and requirement you need to set an expectation of trade-off there are clients that do not want to be involved at all and they want to be hands-off and they want you to do everything and everything means you have to make phone calls and you have to call the bank and you have to log into their own bank account and look for a deposit or a cheque image or you have to go through paperwork or go through spreadsheets or hunt through their filing cabinets you know the client involvement and when they were required for you it's a trade-off that needs to be exchanged with price if the client is going to be heavily involved in giving you the information the information is organized then your price could be set accordingly so that this is what makes such a big deal about you know price that's everything now the disclaimers are important right so you need to start thinking about unknown and potential risks you know like hey what if I log in to your computer remotely and then somebody in and there's a dirty website up you know I'm just gonna log out and and and and get rid of the engagement this has happened to me right when I'm working with a client and log in remotely and they're looking at something that it's just something I don't want to see you know stuff like that so you may want to disclaim that if you if you're gonna work remotely we need a computer that is separate from the personal use that is a hundred percent for business use and it's pretty much set up just for us also you need to avoid implicit assurances a lot of times people just assume that the work you're gonna do it's a it's it's gonna be sustainable by a bank and a banks going to be able to process a loan and it turns out that the bank is requiring reviewed financial statements with notes right or they assume that the work you're gonna do is going to detect fraud or detect bank errors or something like that and then somehow three months later they say what you'll be doing the bookkeeping and you should have caught this earlier so you want to make sure that you want to with language explain you know what are the things that we are that we are not doing that they're the potential risks and we just can't control so make sure you avoid implicit assurances clients always have this really high expectation of that everything you will do will be perfect and it will be used for for everything and then lastly clear pricing definite payment terms you set the expectation of priority right if you have your clear payment terms and clear pricing clients tend to respect your work a lot a lot more now so putting all these things into consideration it's important that we understand the concept of a good deal and a bad deal right so when you present your services in an engagement letter and your engagement letter corroborates with everything you do how you market yourself your reputation how do you explain that how you present that your services what you're willing to do what you're not willing to do what is included what is excluded and how you gonna get paid and what and all these things give the client a perception of value if that value is above the price then the client thinks or feels is a good deal and you're gonna close it faster if you don't have enough perceptions of value and that's lower than the price that's when the client feels is a ripoff right I know this feels like a little bit redundant but it's an important piece to kind of keep in mind as I call it your pricing is extremely important okay all that being said let's talk about high quality accounting services and this whole thing this whole concept wraps up around the concept that if we are able to spell out everything that we're gonna do how we're gonna do it and in the in the in the pace that we're gonna do it and meet the clients expectations and needs we need to in turn promise or give or understand what the clients perception of a high-quality accounting services and and accountants themselves would also agree that this is what they strive for this is what I strive for so what what is a quote unquote high-quality accounting services so that the work is in compliance that's one of the main reasons what people look after us the accountants because they want to be in compliance that want to be legal they they want to be stay out of trouble that sort of thing no penalties are no fees or so typically no communication from government entities it's a good thing right hey that's what customers kind of expect our clients expect not to get penalties and fees even if it's something that was beyond the accountants control and in my experience even the stuff beyond the accountants control we still kind of get blamed for penalties and fees no matter what then you know the fact that it that the financial statements or whatever the output of a work that passes muster you know during an audit during a tax audit or maybe a financial audit so that's something that people perceive as high quality accounting services proactive advice about growing sales and increasing profits and more and more clients are expecting accountants to as they look at the numbers to be proactively telling the client of opportunities that they see you know accountants are not marketing people and they're not consultants of sales and marketing and that sort of thing but if there's something that's obvious to the accountant in terms of what's happening with sales and opportunities to increase sales and profits clients are really gonna perceive that activities as a higher quality a service also on the other side of the financial statement is proactive advice on reducing expenses and reducing risks or or making our clients aware of potential risks based on what we're seeing we're seeing big trends and expenses or big trends in in in potential liabilities they kind of want us to proactively give advice on that now the easy one accurate and dependable financial statements right so these are things that the business owner and the business manager needs to make more informed decisions and one of the hardest ones for a lot of us is to immediately respond to every phone call every email every correspondence and a high level of communication and if you actually go through the exercise of printing this list out and when you sit down with the client and say hey how many of these are important to you if the client highlights all of them then you know you start with a high price right then you know that this client it's setting the expectation this is what they want a lot of times we don't talk about these things upfront and these are just assumed right so the problem is when these things are assumed by the client that you're going to do this but they're not spelled out on the engagement letter that's a big issue so so what I like to do is have these conversations about look what does high-quality accounting services feels to you because obviously I'm not gonna provide low quality accounting services that's it's not a good marketing you know scheme for you right so you always want to offer high quality accounting services so once you spell all these things out you put them in front of a client and you say listen what what from these are your high areas of expectation what are these are high priorities for you and you can have conversations about that and that all of a sudden elevates you to to charge whatever price it's right because your client is going to set this expectation up front now the other piece is to talk about not just the quality let's talk about the value now the value is what the clients perceive and again after reading an engagement letter and ask your their agreeing to something and your agreeing to something you want people to kind of picture in the future the quality and the value both and what what are the things that clients look in terms of value they look at their initial expectations or the expectations that you set and they want them to be exceeded so obviously you never want to oversell your capabilities because that that tends to create too high of expectations and a very difficult one to meet or exceed also no nickel-and-diming it's a really big deal for clients clients feel that a lot of accountants and lawyers and other service professionals are looking for ways to charge for this charge for that send an invoice for half an hour here send an invoice for an hour there so one of the things that I find important is it's good to spell out in your engagement letter what are incidental services what are additional services that way if you are invoicing for them fairly so the client doesn't get that nickel and diming feel so you want to stay away from the potential perception of nickel and diming in order to deliver high-quality accounting service and the last one is it's fair pricing okay as I talked about a couple slides ago that I talked about the quality price scale that we had that graph that said I'll show you here real quick that shows everything above in terms of value above the prices I could deal everything below that below the price in terms of value is a ripoff so you want to make sure that you have this conversations about value upfront and you write copious notes on everything the client wants or what they expect and and the perception of your service and about the stuff that you told them and this is the stuff that needs to go in an engagement letter you know some people think about all these legalese and all these language no spell out what your conversation about value is spell out what your conversation about quality is and you'll see that the engagement letter writes itself so let's sum let's narrow this down into what I call the structure the engagement letter and whether is an engagement letter or a service contract or a fixed-price agreement and you know I'm going to show you an example of mine these are these are the steps that I follow number one define the parties involved right so define the people the management staff and also the company sometimes you do an engagement letter to the company but you don't actually put anybody responsible on that company and then it becomes an issue trying to figure out who's gonna respond for that so so so put who the who the company that you're doing the business with or your client but also the representatives and and put as many representatives as possible to make sure that we close the loop they're defining the scope of work and/or the outcomes and this is a very important piece depending on whether you're doing an hourly engagement then you're gonna be focusing on the type of things that you do and the type of things that you bill for and if you have different rates of course as we mentioned earlier or if we're gonna do a fixed price agreement then we're gonna talk about the outcome and and talked a lot about the outcome because the outcome is what people are paying for and also the the exclusions I think are really important because sometimes when the outcomes are way too vague like you're gonna do my financial statements you know that's so vague you know you know so you know it will this be a pass muster in an audit if this is a tax return you know so all these exclusions need to be put in there now I also like to specify what work when is gonna be doing right sometimes I spell out the processes I like we're gonna log in remotely or we're gonna wait for you to send us the file so sometimes we actually spell out the processes and the steps and we're very very specific about the documentation that we need from clients and the fact that if the client misses the deadline it doesn't put us as default that's a very common issue that we have that we promise that we'll finish it by let's say the 15th but the client doesn't give us a document until the 10th so we have to make sure that when we talk about time frame and when the clock starts taking the clock starts ticking upon and is the language that I put upon complete required documentation by client is received right or upon accountants confirmation that the required documentation by client is complete right so so that wording is important to have in there to make sure the client doesn't expect the time to be ticking after they signed the agreement no it's it's after they give us the documents now I like to define the price and the pricing scheme the pricing strategy and the payment terms obviously that's important that's that's part of the engagement letter disclaimer and and there's a lot of potential expectations the client may have like during your conversation the client said you know I really like to find out if XYZ project is making me money or not and if you don't spell out the fact that you are not going to do a project by project profitability analysis or you are going to do a project by project refer ability analysis limited to proceed you're a B and C then be careful because the client may expect you to do that especially with value price agreements and with value billing it's going to be very difficult for you to sort of add billing to that additional time now constraints and potential causes for timing and quality shortfalls a lot of times because the clients give us bad information incomplete information or they don't give us access to it that is going to create a quality shortfall sometimes when the client is vague on their explanation sometimes when they they can read their their own handwriting and checks and they say well I'll figure it out do whatever you want you know that has a quality shortfall potential so spelling those things out are important too and I think it's very important to to to have an ability to cancel a withdraw you know when I think of any when you think of a marriage think of the divorce when I think of a partnership think of the that's the separation you know you want to start an agreement in which the separation of the parties or the withdrawal from the contract it's clean that way both parties know even if both parties feel that there are loss they know that they can leave clean without it being a fight or turning into a lawsuit of some sort so that is the general structure of the engagement letter service contract a fixed-price agreement as per my perspective again once you spell all the stuff out you definitely gotta see your lawyer for them to approve it now one of the things that I like to recommend when building the scope of work statement which is really what the the bulk of the engagement letter but the scope of work statement is it's the meat and the potatoes of it it's it's what but specifically bridges the expectation gap is what states explicitly what is the work and this is called the what when who how technique which basically instead of typing all this legal jargon is will start with saying what are we gonna do and that's literally the title of the engage of the engagement letter or at least not the engagement letter put the scope of work portion what are we gonna do and then we spell it out and then we say well we're not gonna do and then you spell it out and then you you type in there when we will start the work literally like that this is like literally the headings that we put on the engagement letter right when we'll complete it I'm starting complete you could probably put in the same question how we will do it this is when we explain the process and who will do it you know sometimes it's good to spell in you know who from the organization will be communicating with the client so the client has an idea of you know who specifically is gonna be talking to them and that sort of thing so I want to show you a generic engagement letter I'm gonna go to my website real quick where I haven't have them in there so I'm gonna include this link is on the on the slides that are sent on the email afterwards but I'm gonna pull up that page where I have that information okay so this is my website but I have a couple of engagement letters and I'm gonna pull up this one called QuickBooks setup agreement letter so it's just called QuickBooks setup agreement letter if you're a QuickBooks ProAdvisor this is part of your provider tool kit but you can soon see it here but I think this letters talk about who when what technique pretty well so the first piece of the engagement letter and these are provided by into it we start by just kind of saying hello customer thank you for working with us the opportunity to work with us etcetera etc then we start with what are we gonna do right this could be a question that this could be a statement and this is what you specifically say what is it that the client wants us to do and then we're gonna say what we won't do and literally just like that right what we won't do this is the stuff that we're not gonna do the stuff that is not covered the fact that this is not an audit the fact that this is not guaranteed to pass muster in a tax audit the fact that where we are we're not verifying each document the fact that we are not hired we're not hired to detect fraud or misrepresentation or stuff like that and then we talk about what we need from you and that you know that's part of the what you know this is where we're going to specifically say the the documents and you can do bullet points here like we need you know bank statements we need bank images we need checks where we will do it this talks about time frame and this is actually covering both when we started will will finish both pieces of it hardware and software warranties this is typically when we're working on computers and we have a disclaimer saying look we're just working on QuickBooks we're not really messing with the operating system if for whatever reason your computer blows up in the middle of this whole thing yeah this is not this is not what we do we don't we don't fix the computers we recommend to use an IT professional to install the software troubleshoot don't use us for troubleshoot that sort of thing and then we have services outside of the scope of work which is actually not the same thing as as what we won't do so what we won't do really talks about the limitations of the services we provide and services outside of scope of work this is talking about stuff that we could do but but if there would be an additional fee or it would be outside of the agreement right or we have to wait until we complete this engagement to start a new engagement for this out of scope kind of tasks and then we talk about the fees where there is an hourly or flat fee whatever it is and then in this case I used the approvals just saying that both people both of these people an acknowledgement and the minute that we get the signatures we are we are legally bound to start the work and you're legally bound to pay us and you know some of the there's no language in this one and how do we draw for this contract but I actually recommend doing that so this is just an example of the who what who what when letter let me do it let's do another one called a QP services engagement and and these are all going to be pretty similar because these are these are based on the same sort of a template system so there it is again what we will do and this is talking about you know troubleshooting QuickBooks and then it says what we won't do which is talking about just the fact that this is not an audit and then what we need from you again list of documentation so it's basically the same thing so as you go through the sample engagement letters and I'll post a link here under when there's a couple of really interesting documents this one called they complete what will do guide by a CPA Mutual this is a an insurance company that put together a real neat guide and this thing is like 50 pages it's huge and it actually 60 pages and it actually talks about engagement letters for different types of contracts it talks about engagement letter for tax return and engagement letter for the assurance set of works which is all review compilation so this document in particular I recommend because this is really designed to protect the accountant and the liability of the CPA for the most part and if you jump here to like one of these sample ones and I'm gonna go all the way down so we can actually see the sample letter that they use here there we go let's do this one okay there's one here for for for putting together financial statements that are going to be sent to a bank right something like that so this talks about look look at the structure of this one this talks about nature and scope first and then it talks about roles and specifically what the firm is gonna do this is like a sort of like a consulting financing type of engagement and then it says what the client is gonna do so notice that this this one has a different structure this one is nature and scope then rolls and then he goes to results and benefits so it talks about what is the end result of the work and how do you how do you how do you measure that and then talks about some of the intangible stuff like the stuff that you can't measure like you know walking into the bank with confidence and understanding your business better after this engagement that that's not tangible right we can't really put a number to that but um these are things that they like to spell out on this agreement and then talks about commencement and scheduling a work that's basically talking about time frames right and then here it talks about when the job is complete and also how the job could be terminated and then talks about fees and payments and some some engagement letters separate fees from from payments then we talked about some there's some legal jargon here about limited liabilities and stuff like that and then dispute resolution right so if there's a dispute are we gonna go to arbitration and this is where the legal stuff comes into place this document was actually written by a lawyer or a couple of lawyers so I think it's interesting for you to look at the these that contain a lot of those legalese terms and then the other ones especially in six here the ones that that were provided by Intuit which are more more for QuickBooks services that don't have so much assurance to that so I think those are interesting to to kind of review as part of the exercise now if you go to the organizations that you belong to like AI CPA or a IPP or IP VC or whatever bookkeeping accounting like pro advisors have those letters that I show you they typically will have engagement letters and samples for you to work in insurance provider right so insurance providers typically want to protect the accountant from being sued so they're gonna provide a plethora of engagement letters at Google I know this sounds redundant but a lot of these resources I literally google them and I look for the ones that I that I really want and it's needless to say once you're done doing an engagement letter if you modify one or create one it's very prudent for you to consult your attorney before we actually go there but lastly I will show you mine and if you email me I'll send you mind this is something that I build over the years I can have a combination between the legal terms and what I call the what who when strategy where I actually define here who all the parties are what's an agreement what's a document what's a service what's an accountant what's a staff accountant because I actually used when I do hourly pricing I do split pricing I split my low level and my high level fees I do a brief description of the service and it's kind of a proposal because I actually do a proposal and an agreement at the same time then I talk about an assessment that the client needs so I actually do a summary of everything the client said that they wanted and then after I did the assessment I actually explain what is it that I'm actually going to do and then I do the scope of work the survey so I actually I actually make it a point to write down what the client wanted but also write down what I'm gonna do that way the client can ever say well I told you one of this and it was implied that you were gonna do it and the answer is no I wrote down what you want it and then I also wrote down what I'm gonna do and what I'm not gonna do and then I spelled out how I'm gonna charge and I split if it's a service or an accountant type of work then I talk about payment terms maximum project costs you know I talk about that there's no maximum in the case of an open engagement and then we'll talk about the agreement termination who can end the engagement at whatever time and what the maximum risk of the client is if they're not if they're not satisfied in satisfaction with the service and then we talk about potential additional notes we talked about what they said they wanted in the future so I write that in there saying the client may want that and that's gonna be price differently and obviously the signatures afterwards so that's my engagement letter that's that I'm not gonna say it's been reviewed by a lawyer or anything like that because I can get me in trouble but if you