Engagement letters do more than protect CPA firms; they can also be among the most valuable tools in a firm’s operations.
Stephanie Otero, VP – Small Firms Advocate at the AICPA talks with Sarah Ference, Risk Control Director for the Accountants Program at CNA, and Nicole Graham, Risk Consultant at Aon, about what makes an engagement letter effective. Drawing on real claim examples, they explain how specific wording can make a meaningful difference when questions arise about what a firm was, or was not, engaged to do.
As firms move further into advisory and outsourced services, the need for a clearly defined scope becomes ever more important. The conversation looks at scope creep and seemingly harmless client requests that begin with “one more question.” Sarah and Nicole share ways to document additional work and explain why a firm’s engagement letter, client communications, and billing should tell a consistent story. They also discuss how smaller firms can make engagement letters a routine part of doing business rather than another administrative task competing for time.
The discussion closes with considerations around AI, including why firms may want their engagement letters to address the use of AI in client services while making clear that professional judgment and responsibility for the work remain with the firm.