Accounting Engagement Letter Template for the United States

An Accounting Engagement Letter is a legal document that formalizes the working relationship between you and your CPA firm. It sets out the services to be provided, the responsibilities each side carries, and the terms and conditions that apply, keeping the arrangement clear from the first day of the engagement.

What is an AICPA consulting services engagement letter?

A consulting services engagement letter is the version used when a CPA firm provides advisory work rather than an audit, review, or compilation. Examples include business planning, financial modeling, systems selection, transaction support, and general management advice. The AICPA Statement on Standards for Consulting Services (SSCS No. 1) treats consulting as a distinct type of engagement, so the letter should describe the specific advisory work, the deliverables, and the assumptions the advice rests on. The Statement on Standards for Consulting Services is issued by AICPA members and sets the professional duties that apply once a member takes on advisory work. This template covers both assurance and consulting engagements, so you can adapt one document to the type of service you are buying.

When do you need this document?

You need an engagement letter whenever you engage a CPA firm, whether for audits, reviews, compilations, tax preparation, bookkeeping, or consulting services. AICPA standards call for this record on most engagements to fix the scope and nature of the work. The letter matters when starting a new client relationship, expanding existing services, or when there is a significant change in your business structure or accounting needs. Public companies should confirm the letter meets Sarbanes-Oxley Act requirements, while private companies benefit from clear written limits on what is and is not included.

Key legal considerations

The letter should define the scope of services precisely so both parties understand what is covered and where the work stops. It should identify which professional standards apply, including AICPA standards, SSARS for review and compilation engagements, SSCS for consulting work, and relevant GAAP requirements. Spell out client responsibilities, including providing accurate records and maintaining proper internal controls. Fee arrangements, payment terms, and how questions or disputes get resolved belong in the letter too. Consider clauses on confidentiality, record retention, and the circumstances under which either side may end the engagement. For tax services, confirm the language meets IRS Circular 230 requirements for written advice.

Legal requirements in United States

Under United States rules, engagement letters must follow AICPA Professional Standards, which call for written agreements on most professional services. SSARS applies to compilation and review engagements, and SSCS applies to consulting engagements, each requiring clear identification of the level of service and the related responsibilities. If your business is publicly traded, Sarbanes-Oxley Act provisions add independence and documentation requirements. State Board of Accountancy rules vary by jurisdiction but generally require proper records of the professional relationship. The letter should also address IRS Circular 230 for tax services and comply with state law on professional services contracts and liability limitations.

What should a consulting services engagement letter include?

A clear consulting engagement letter usually covers the following, and using this as a checklist helps you plan the scope before the work starts:

• The parties: the client and the CPA firm, with contact details for the person responsible on each side.
• Scope of services: the specific advisory work, deliverables, and any work that is expressly excluded.
• Standards: a reference to the AICPA standards and the Statement on Standards for Consulting Services that govern the engagement.
• Fees: the fee basis, estimates, billing schedule, and payment terms.
• Responsibilities: what the client must supply and what the firm will produce.
• Term: the start date, expected duration, and how either side can end the engagement.
• Terms and conditions: confidentiality, record retention, and dispute resolution.

Worked example

Suppose a growing software company hires a CPA firm to advise on choosing new financial reporting software during 2026. The engagement letter would name both parties, describe the advisory scope (evaluate three systems, run a fit assessment, deliver a written recommendation), state the fee as a fixed amount, list what the company must provide (access to current reports and a named contact for questions), and set the terms and conditions covering confidentiality and how the parties resolve any disagreement. Because this is advisory work, the letter cites the Statement on Standards for Consulting Services rather than audit standards.

Where to find related documents and answers

If you're setting up a broader advisory relationship, you may also want a consulting agreement to sit alongside the engagement letter, or a professional services agreement for ongoing work. GenieAI drafts each of these to your own terms, checks the content against your playbook, and flags risk in red, amber, and green so your commercial team can agree with confidence.