Accounting Engagement Letter Template (Canada)

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

Under the CPA profession's harmonized Rule 204 on auditor independence, providing bookkeeping or similar services to a client the same firm also audits or reviews creates a self-review threat — the firm ends up, in effect, reviewing its own work — and specific safeguards are required to reduce that threat to an acceptable level. This isn't a reason to avoid offering both; it's a reason to say so in the engagement letter rather than bundle them on one undifferentiated checklist the way a generic template does. This template's services section flags it directly when both boxes are checked.

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 preparation, or attest 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 attest (audit or review) services to this same client, flagging that nonattest services like bookkeeping need specific safeguards to avoid impairing independence under Rule 204.

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.

Use of client information beyond this engagement (conditional)

Appears for engagements involving personal information used beyond the scope described above: plain-language consent addressing the CPA Code's confidentiality rule and, where personal information is involved, the meaningful-consent standard under federal privacy law.

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 favoring one side.

Requirements checklist

• A compilation engagement requires a written engagement letter

  CSRS 4200, Compilation Engagements — which replaced the old Notice to Reader standard for periods ending on or after December 14, 2021 — requires a formal engagement letter agreed and signed before the work begins, along with a minimum level of documentation and specific acknowledgements from management.

  CPA Canada — Audit & Assurance Alert, CSRS 4200 Compilation Engagements

• An audit engagement's terms must be agreed and recorded in an engagement letter

  Canadian Auditing Standard CAS 210, Agreeing the Terms of Audit Engagements, requires the auditor to agree the terms of the audit with management or those charged with governance and to record the agreed terms in an audit engagement letter or other suitable form of written agreement before accepting the engagement.

  CAS 210, Agreeing the Terms of Audit Engagements

• Nonattest services to an attest client need independence safeguards

  Providing bookkeeping or similar nonattest services to a client the same firm also audits or reviews creates a self-review threat under the CPA profession's harmonized Rule 204 on auditor independence; specific safeguards must be identified and applied to reduce the threat to an acceptable level.

  CPA Canada — Rule 204, Auditor Independence

• Client information can't be used for a new purpose without meaningful consent

  Under the CPA Code's confidentiality rule, a member must not disclose or exploit client information acquired through the engagement without proper cause and specific authority. Where the information is personal information and the intended use goes beyond the engagement itself, PIPEDA's consent principle requires meaningful consent, clearly identifying the new purpose, before that use.

  Office of the Privacy Commissioner of Canada — PIPEDA Consent Principle

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 preparation, or attest work.
3. Flag if the firm also provides attest services to this client. If the firm audits or reviews this same client's financial statements, 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 client-information consent clause if it applies. Turn on this clause if the engagement may involve using client information beyond the services described, so the consent 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