As an accounting business, you have specific obligations to your clients that you want to maintain and set out clearly in your Terms & Conditions and Engagement Letter.
Engagement Letters are important to give to your clients before you start your work for them, particularly as there are many risks and liabilities associated with giving tax-related advice.
Having these Terms and Conditions on your Engagement Letter makes sure that your client is aware of the scope of the services they’re receiving, and it is easier to enforce if there are any disputes.
It sets expectations for your clients and gives your accounting firm the appearance of professionalism as you’ve just approached your clients with transparency.
What’s In It?
Provisions that should be in your Accountants Terms of Engagement include:
- Payment: This is so your client is aware of your billing practices (whether they’re on a subscription basis for their business, or if they’re coming to you for one-off consultations for their tax-returns). It will also include terms for late payment.
- Limitations of liability and disclaimers: This is to ensure that your liability is limited if your client incurs any losses as a result of your advice (it is important to note that there are some liabilities you may not be able to contract out of).
- Scope of services: This is so your clients are aware of exactly what services they will be receiving and are entitled to. It will also set out your roles and responsibilities.
- Intellectual property: If you give your clients access to any software or any intellectual property, then the terms and conditions should ensure that your accounting firm still retains ownership of it.
- Confidentiality: This is to reassure your clients that all their information, whether it be personal or business, will be kept confidential.
- Term: This will set out the term of your services and for how long they will be receiving services.
- Professional standards: It may be set out in the engagement letter that accountants will act in accordance with standards and ethical requirements of their Professional Standards Authority.
Privacy Policies: Do I Need Them?
If your accounting firm or organisation receives individuals’ Tax File Numbers (TFNs), then there may be extra obligations for your business under the Privacy Act.
If you are an authorised TFN recipient, and are requesting TFNs from your clients then you must:
- Tell individuals the name of the law that authorises them to collect the TFN information, the purposes for which they are being collected, that they have the option to refuse to supply their TFN, and the consequences for doing so
- Ensure the manner of collecting their TFNs does not intrude on the clients’ affairs
- Take reasonable steps to ensure that only the most strictly necessary information is being collected
These can be complicated concepts to understand, particularly as there are TFN rules in addition to your obligations under the Australian Privacy Principles.
It is highly recommended to get advice from lawyers to make sure you’re also adhering to your privacy protection obligations.
Having an Accountant’s Terms and Conditions and Engagement Letter is important to make sure both you and your clients are aware of the services being provided.
It is useful in protecting your business’ interests so you’re protected from any liabilities your business may incur.
Sprintlaw has helped many accounting firms start up their businesses. Get in touch with us at firstname.lastname@example.org to find out how we can help you!
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