Accounting Engagement Letter Template (Australia)

If the firm also audits this client, bookkeeping isn't a neutral add-on

Under APES 110 Code of Ethics for Professional Accountants, providing accounting or bookkeeping services to a client the same firm also audits creates a self-review threat, because the firm would effectively be auditing its own work. APES 110 allows only routine or mechanical bookkeeping tasks for an audit client — posting coded transactions, posting approved journal entries, and preparing financial statements from a client-approved trial balance are treated as routine or mechanical, but anything requiring the accountant to exercise significant judgement on the client's behalf goes further and needs specific safeguards, or the engagement should be declined. This template's services section flags the issue directly when both boxes are checked, rather than bundling audit and bookkeeping on one undifferentiated checklist.

A retainer can't be both refundable and non-refundable — pick one

A retainer clause needs to say one clear thing about what happens to unused funds: either they're credited toward future fees or refunded when the engagement ends, or they're non-refundable outright. A clause that promises both in different sentences isn't a compromise — it's an unenforceable contradiction that a court will have to resolve for you, on facts you didn't control. This template's retainer clause makes you choose.

Indemnification should run both ways, and match the liability cap

A one-way indemnity — the accountant protects the client, but not the reverse — paired with a liability cap that only limits the accountant's exposure, leaves the accountant with an open-ended obligation and the client with a capped one for the same relationship. This template's indemnification runs both ways and its cap applies to both parties equally, which is both fairer and more likely to be enforced as written.

The clauses, explained

Scope of services

The specific services provided — bookkeeping, financial statements, payroll, tax return preparation, or audit or review work — described precisely enough that both sides agree on what's included and what isn't.

Independence note (conditional)

Appears automatically if you indicate the firm also provides audit or review services to this same client, flagging that nonassurance services like bookkeeping create a self-review threat under APES 110 and need to stay within the routine-or-mechanical limits, or specific safeguards.

Fees and billing

Flat fee, hourly rate, or another basis, plus how and when invoices are issued and paid.

Retainer (optional)

If used, states clearly whether unused funds are credited toward future fees or refunded, or non-refundable — one rule, not a contradiction.

Client responsibilities

The client's duty to provide accurate, timely information — since the accountant's work product is only as reliable as what the client supplies.

Ownership of working papers

States that the accountant's own working papers and files remain the accountant's property even though they relate to the client's records — a standard professional-practice point most consumer-facing templates omit.

Tax agent services (conditional)

Appears automatically for engagements that include tax return preparation: a statement that the engagement is provided in accordance with the Tax Agent Services Act 2009 and the Code of Professional Conduct that registered tax agents must follow.

Mutual indemnification and liability cap

Each party indemnifies the other for their own negligence or breach, and liability for either party is capped at the fees paid under the engagement — applied evenly rather than favouring one side.

Requirements checklist

• Nonassurance services to an audit client must stay within self-review limits

  APES 110 treats providing accounting and bookkeeping services to an audit client as creating a self-review threat. Only routine or mechanical tasks — such as posting client-coded transactions or preparing statements from a client-approved trial balance — are generally acceptable; anything requiring significant judgement on the client's behalf needs specific safeguards or the engagement should be declined.

  APES 110 Code of Ethics for Professional Accountants

• An audit or review engagement's terms should be agreed and recorded

  The Australian Auditing Standard ASA 210 deals with the auditor's responsibility to agree the terms of an audit engagement, and includes illustrative engagement letters that firms adapt to individual circumstances.

  AUASB — ASA 210, Agreeing the Terms of Audit Engagements

• Registered tax agents must comply with the Code of Professional Conduct

  A tax practitioner providing tax agent services in Australia must be registered with the Tax Practitioners Board and comply with the Code of Professional Conduct under the Tax Agent Services Act 2009, which covers matters including honesty, independence, confidentiality, and competence.

  Tax Practitioners Board — Code of Professional Conduct

How to use this template

1. Fill in the firm and client. Type the accounting firm's and client's names and addresses into the highlighted blanks.
2. Describe the scope of services. List the specific services covered — bookkeeping, financial statements, payroll, tax return preparation, or audit or review work.
3. Flag if the firm also audits or reviews this client. If the firm provides audit or review services to this same client, select yes so the independence note appears — this is the single most important box on the form.
4. Set fees, billing, and the retainer if used. Choose flat, hourly, or another fee basis, the billing frequency, and — if using a retainer — whether unused funds are credited or refunded, or non-refundable.
5. Add the tax agent services clause if this engagement includes tax return preparation. Turn on the tax clause so the Tax Agent Services Act 2009 and Code of Professional Conduct language appears alongside the rest of the agreement.
6. Sign and download. Both parties sign, then download the agreement as a Word or PDF file before work begins.

Frequently asked questions