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As an accounting business, you have specific obligations to your clients that you want to maintain and clearly set out in your Terms & Conditions and Engagement Letter. In 2025, with evolving regulatory standards and digital practices, these documents are more crucial than ever to protect your firm and foster client trust.
Engagement Letters are critical to provide to your clients before you commence work, particularly given the increasing risks and liabilities associated with delivering bespoke tax and advisory services in today’s digital landscape. They ensure both parties have a clear understanding of expectations and responsibilities from the very start.
Having these Terms and Conditions detailed in your Engagement Letter ensures your client is aware of the scope of the services they’re receiving, and it becomes easier to enforce accountability if disputes arise. This clarity is vital in a market where statutory and digital risks are on the rise.
It sets clear expectations for your clients and projects a professional image for your accounting firm, demonstrating transparency and compliance with industry standards such as those outlined by Chartered Accountants Australia and New Zealand, as well as guidance from reputable sources like our Professional Standards Authority.
With the rapid digital transformation continuing into 2025, many accounting firms are now including additional clauses addressing cybersecurity measures, data breach response protocols, and online compliance guidelines. By incorporating these modern provisions, you can safeguard client data when utilising digital platforms and ensure your firm remains compliant with the latest privacy policies and Australian Privacy Principles. For further insight into protecting digital assets, you might also browse our advice on intellectual property and contractor agreements.
What’s In It?
Provisions that should be in your Accountants Terms of Engagement include:
- Payment: This outlines your billing practices-whether on a subscription basis for ongoing services or for one-off consultations such as tax returns-and includes clear terms for late payment to avoid any misunderstandings.
- Limitations of liability and disclaimers: This clause limits your liability if a client suffers losses due to your advice, while acknowledging that certain statutory liabilities cannot be fully waived.
- Scope of services: Clearly defining the services your clients will receive ensures both parties understand the exact role, responsibilities, and limitations of the engagement.
- Intellectual property: If you provide clients with access to proprietary software or other intellectual property, your terms should ensure that ownership remains with your firm. For more guidance, refer to our advice on protecting your intellectual property.
- Confidentiality: This reassures your clients that all personal and business information disclosed during the engagement will be kept strictly confidential and handled in accordance with current legal standards.
- Term: This sets out the period for which your services will be provided, including details about renewals, extensions, or termination conditions.
- Professional standards: Your engagement letter should confirm that you will adhere to the professional and ethical standards mandated by bodies such as Chartered Accountants Australia and New Zealand, as well as any updated regulatory requirements.
Privacy Policies: Do I Need Them?
If your accounting firm collects individuals’ Tax File Numbers (TFNs) or other sensitive data, you have additional obligations under the Privacy Act and the Australian Privacy Principles-especially in the era of heightened digital data collection in 2025.
If you are an authorised TFN recipient and you request TFNs from your clients, you must:
- Inform individuals about the law that authorises the collection of their TFN information, the purposes for which it is being collected, and that they have the option to refuse to supply it along with the potential consequences.
- Ensure that the collection method respects your clients’ privacy by not intruding on their personal affairs.
- Take reasonable steps to ensure that only the absolutely necessary information is collected to deliver your services effectively.
Understanding these obligations can be complex, particularly as TFN rules operate alongside your other data protection responsibilities. For further information on current requirements, consider reviewing the updated guidelines on the OAIC website or our detailed privacy policy resource.
It is highly recommended to seek advice from legal professionals to ensure you fully comply with your updated privacy protection obligations.
Need Help?
Having a well-drafted Accountant’s Terms and Conditions and Engagement Letter is essential for ensuring that both you and your clients clearly understand the services being provided, particularly in the dynamic legal environment of 2025.
Incorporating comprehensive provisions in your engagement documents not only protects your firm against potential liabilities but also demonstrates your commitment to modern professional and digital standards. With the rise of remote consultations, virtual workspaces, and enhanced cybersecurity requirements, many accounting firms are now updating their contracts to reflect these changes. For more insights on managing these contemporary challenges, you might also explore our resources on conflict of interest policies and consulting agreements.
It is useful in protecting your firm’s interests so you’re safeguarded from any liabilities that may arise.
Sprintlaw has helped many accounting firms update their engagement documents to reflect the latest legal and industry changes. Get in touch with us at team@sprintlaw.com.au to find out how we can help you!
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