Accountant Disengagement Letter Template (Canada)

In Canada the predecessor has a positive duty to respond — and the letter is how consent gets captured

The provincial codes of professional conduct impose obligations at both ends of a change of firms. A successor must not accept an engagement without first communicating with the predecessor and enquiring whether there are circumstances that should be considered in deciding whether to accept it. And the predecessor must respond promptly to that communication, including advising whether they withdrew or resigned from the engagement.

That is a meaningfully different position from the United States, where the framework is consent-driven and nothing obliges a departing firm to volunteer anything, and it differs in emphasis from the UK, where the duty is framed around the incoming accountant's professional enquiry. Here, ignoring a takeover letter is itself a problem.

The complication is that responding still requires the client's authorization, because confidentiality obligations survive the engagement. A firm caught between a professional duty to respond and a duty not to disclose without consent has one clean answer: get the consent in writing at the point of departure. That is what the client response at the end of this letter does, and it is the single most useful thing in the document — a signed authorization is far easier to rely on months later than a recollection of a phone call.

It is worth noting in the letter that the successor's enquiry is about circumstances relevant to accepting the appointment. It is not a route to inherit the incoming firm's own client-identification work, and it does not turn the outgoing firm into a guarantor of the client's affairs.

A cut-off for each service, because the filing cycles do not line up

Canadian compliance runs on several cycles at once: a corporate or personal income tax return annually, GST/HST returns monthly, quarterly or annually depending on the filing period, payroll source deductions on a remittance schedule set by remitter type, T4 and T5 information returns at the end of February, and provincial filings on their own dates. A firm leaving mid-year is almost always part-way through more than one.

So a letter stating that the firm will cease to act from one date leaves every cycle unresolved, and the shortest ones are the most dangerous. Source deductions carry penalties that begin immediately on a late remittance, and the penalty escalates for repeat lateness. Nobody wants to discover in March that the February remittance belonged to neither firm.

This template asks you to switch on each service that was in scope and give it two facts — the last period completed and the date it was filed — and then to list what falls due next. Each service prints its own cut-off followed by an explicit statement that the firm accepts no responsibility for later periods.

CRA authorizations do not end because the engagement did

A representative's authorization in Represent a Client stays in place until it is cancelled. Ending an engagement does nothing to it, which is how a former accountant continues to have access to a client's CRA accounts and how correspondence keeps arriving at a firm that no longer acts. It is also why a client sometimes finds their old firm still listed as representative long after they moved.

Authorizations are granted per account and per entity, so a corporate client with a payroll account, a GST/HST account, its directors' personal accounts and perhaps a family trust involves several separate authorizations rather than one. This template asks for a list of the entities and accounts involved, because naming them is what stops one being missed.

The same section prompts the items that are usually forgotten: administrator access to accounting and payroll software the firm managed, any authorization with a provincial revenue body such as Revenu Québec, which maintains its own separate representative arrangements, and access to a payroll service provider's portal.

Records: return the client's own documents, and keep the fee question separate

A lien over papers for unpaid fees is recognised in Canadian practice but it is narrow: it does not extend to documents that belong to the client and were provided in the ordinary course of the engagement, and exercising it over material the client needs for a filing deadline turns a fee dispute into a professional-conduct complaint. Provincial bodies publish guidance on obligations when a client relationship ends precisely because this is where firms misjudge it.

This letter therefore separates three things. The client's own books, records and source documents are returned. The firm's working papers, schedules and analyses remain the firm's property, although the firm will provide what a successor reasonably needs. And any lien is dealt with in the fees section, as a debt, rather than used to condition the return of records.

The collection period is a field, and the letter states the client's own retention obligation alongside it — records generally need to be kept for six years from the end of the last tax year to which they relate, with longer periods in specific circumstances. A short destruction deadline that ignores that is how records a client is required to keep get thrown away.

Quebec, and the compilation engagement that has to be finished or abandoned cleanly

Two Canadian specifics are worth handling explicitly rather than glossing. The first is Quebec: the Ordre des CPA du Québec regulates there, Revenu Québec maintains separate representative authorizations from the CRA's, and the province's civil-law rules and privacy regime differ from the common-law provinces. A disengagement in Quebec has extra authorizations to unwind and should be reviewed locally.

The second is a compilation engagement in progress. Since CSRS 4200 applies to compiled financial information for periods ending on or after 14 December 2021, a compilation is a defined engagement with documentation requirements attached, and "we were part-way through the compilation" needs a decision rather than a vague handover. Either the firm completes it as named residual work, or it stops and says so — including whether a compilation engagement report was issued and for which period.

This template's compilation section asks for exactly that: the last period compiled, whether a report was issued, and whether any work in progress is being completed or abandoned. It is the kind of detail a successor firm will otherwise have to reconstruct from the file.

The sections, explained

Direction of the letter

Firm ceasing to act, or client ending the engagement. Every section that differs — purpose, requests, authorizations, signature roles — swaps automatically.

Purpose and effective date

States that the relationship is ending and from when, and identifies the engagement letter being brought to an end.

Basis of cessation

Immediate, or on completion of named residual work. Choosing the second reveals a list for exactly what will still be finished, which is the only way to promise continuing work without contradicting the cessation statement.

Services and per-service cut-off

One switch per service — compilation, corporate and personal tax, GST/HST, payroll and source deductions, information returns, bookkeeping, corporate filings — each printing the last period completed, the filing date, and a statement that no responsibility is accepted for later periods.

Compilation engagements in progress

The last period compiled, whether a compilation engagement report was issued, and whether work in progress is being completed or stopped — a decision CSRS 4200 makes necessary rather than optional.

Filings falling due

What is coming up after the cut-off and who now owns it, with source deductions and information returns called out because their deadlines are short and the penalties immediate.

Communication with the successor firm

The client's written authorization for the outgoing firm to respond to the successor's enquiry — which the provincial codes require the firm to answer promptly, and which confidentiality prevents it answering without consent.

CRA and provincial authorizations

Cancellation of the firm's representative authorizations, account by account and entity by entity, plus provincial revenue authorizations, software access and payroll-provider portals — none of which end because the engagement did.

Records and working papers

The client's documents returned, the firm's working papers identified as its property, a collection period, and the client's own six-year retention obligation stated alongside it.

Outstanding fees and lien (optional)

What is unpaid and when it is due, with any lien reserved only so far as the law and professional obligations permit — kept separate from the return of records.

Confidentiality, liability and governing law

Confidentiality survives, subject to legal and professional obligations including practice inspection; the liability position in the original engagement terms continues to apply to work already done; and the governing province, with Quebec flagged.

Client response

A signature block for the acknowledgement, which turns the successor authorization and the cut-off dates into something agreed rather than asserted.

What to get right in a Canadian disengagement

Confirm the current position with your provincial CPA body before sending a disengagement letter — regulation is provincial and Quebec differs materially.

• Respond promptly to the successor firm's enquiry

  Under the provincial codes of professional conduct, a successor must not accept an engagement without first communicating with the predecessor to enquire about circumstances relevant to accepting it, and the predecessor must respond promptly, including advising whether they withdrew or resigned. Both ends carry an obligation, so failing to answer a takeover letter is itself a problem.

  CPA British Columbia — communication with predecessor / successor

• Get the client's authorization before releasing information

  Confidentiality obligations survive the engagement, so the duty to respond to a successor does not by itself permit disclosure of the client's affairs. Capture written authorization at the point of departure — which is what a disengagement letter's client response is for — rather than relying on an oral consent recalled months later.

  CPA British Columbia — professional obligations when a client relationship ends

• Deal with a compilation engagement in progress explicitly

  CSRS 4200 Compilation Engagements applies to compiled financial information for periods ending on or after 14 December 2021 and attaches documentation requirements to the engagement. A compilation part-way through therefore needs a decision recorded — completed as named residual work, or stopped — together with the last period compiled and whether a compilation engagement report was issued.

  CPA Canada — CSRS 4200 guidance resources

• Cancel CRA representative authorizations account by account

  A representative's authorization remains in effect until it is cancelled, so ending the engagement does not remove the firm's access to the client's CRA accounts. Authorizations are granted per account and per entity, so a corporate client with payroll and GST/HST accounts, personal accounts for its directors and perhaps a trust involves several separate cancellations.

  CRA — authorize a representative

• Do not let a lien cut across professional obligations

  Any entitlement to retain documents for unpaid fees does not extend to documents belonging to the client and provided in the ordinary course, and exercising it so that a client cannot meet a filing obligation risks a conduct complaint larger than the fee. Deal with unpaid fees as a debt, separately from the return of records.

• Respect the client's retention obligations when setting a collection deadline

  Records generally need to be kept for six years from the end of the last tax year to which they relate, with longer periods in specific circumstances and different rules where early destruction is permitted. A short collection window followed by destruction can dispose of records the client is required to keep, so state the position and make destruction subject to notice.

  CRA — keeping records

• Handle Quebec separately

  The Ordre des CPA du Québec regulates there, Revenu Québec maintains representative authorizations separate from the CRA's, and Quebec's civil-law and privacy regimes differ from the common-law provinces. A Quebec disengagement has additional authorizations to unwind and terms that should be reviewed locally.

How to write the letter

1. Choose the direction. Firm ceasing to act, or client ending the engagement. This decides the purpose wording, the requests and the authorizations.
2. Fill in the parties and the engagement being ended. Sender and recipient details, the date of this letter, and the date of the engagement letter being brought to an end.
3. Set the basis and effective date. Immediate, or on completion of named residual work. If a compilation is part-way through, decide which and say so.
4. Switch on each service and give its cut-off. For every service, the last period completed and the date it was filed. Then list the filings falling due next.
5. List every entity and account whose authorization needs cancelling. Corporate, payroll and GST/HST accounts, directors' personal accounts, any trust, and any Revenu Québec authorization are separate — naming them is what stops one being missed.
6. Send it and keep the signed response. Download as Word or PDF, send it with a copy for signature, and keep the signed response — it is the authorization that lets you answer the successor firm's enquiry.

Frequently asked questions

Related templates

• Accounting Engagement Letter Template (Canada)
• Acknowledgement Letter Template (Canada)
• CPA Standard Terms and Conditions Template (Canada)