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An accounting engagement letter is the written deal between you and your accountant: what they will do, what you must hand over, when, and for how much. For an audit, the Canadian auditing standard CAS 210 says the terms must be agreed in writing. For a tax return or bookkeeping job, no single rule tells you what the letter must say, so you have to read it with care.
What should an accounting engagement letter cover?
Start with the job itself. “Tax work” is too loose. A good letter names the return or statements, the tax year, and the form (a T1, a T2, year end financial statements, GST/HST returns, payroll). If a service isn’t listed, assume it isn’t included.
Then look for the parts in the table below. This list is built from the audit standard’s approach and from common sense about what goes wrong. It isn’t an official checklist for tax or bookkeeping jobs. The audit standard is the one place with a written-terms rule, so it makes a useful model.
| Term | What to look for |
|---|---|
| Scope | Which returns, statements or filings, and which years |
| Your duties | What you supply, by which date, and who keeps the originals |
| Their duties | What they prepare, review and file, and what they only advise on |
| Fees | Flat fee or hourly, what is billed extra, when invoices are due |
| Deadlines | Internal dates for your documents and their filing dates |
| Access | Whether they act for you with the CRA, and at what level |
| Ending it | How either side can stop, and what happens to your records |
Who is responsible for the numbers?
You are. Signing a letter doesn’t move that. The letter should say plainly that you’re responsible for the accuracy of what you give your accountant, and that they rely on it. If your books are late or incomplete, the letter is where you agree what that will cost.
For audits, CAS 210 also deals with management’s responsibilities and with how the terms are recorded. The exact wording of the required items isn’t quoted here. Ask the firm to show you which clauses come from the standard.
How do fees and extra work get written down?
This is where letters cause the most quarrels. No official source sets a fair fee, so there’s no number to quote. What you can do is check that the letter says how a fee moves.
Say a letter quotes a flat fee for one T2 return and an hourly charge for anything outside it. That’s a made-up shape, not a real price. Ask what counts as “outside”: a late slip, an amended return, a CRA letter. Ask, too, whether a reassessment or a review by the CRA is covered by the flat fee or billed separately. One line in the letter can save a long email chain.
Fees are also a good time to look at your own cost side. A business that pays an accountant for a year end may also owe corporate tax, and a sole owner may want to know the tax and CPP on self-employed income. Those numbers should be in your plan before you agree to the scope.
What about CRA access and confidentiality?
Many letters say the firm will deal with the CRA for you. The CRA has its own process for that, called authorizing a representative, and you control the level of access.
Effective July 15, 2025, the Authorize a Representative service within EFILE software is no longer available for individual clients.
Important changes to how tax preparers obtain access to an individual’s account, canada.ca
In practice, preparers now use the Represent a Client service for individual accounts. So if a letter promises access, ask which route they use and check what you approve in your own CRA account.
Confidentiality and record storage matter just as much. Ask where your documents are kept, for how long, and how you get them back if you leave. There isn’t one official retention period that fits every case, so the letter should state the firm’s own.
Where an engagement letter goes wrong
Unsigned letters are common. Vague scope is more common. And the classic trouble is a letter that says nothing about what happens when the CRA asks questions two years later.
Watch for a letter that renews itself every year without a new signature. Check that the scope covers the payroll remittances you assumed were included (see the payroll remittance calculator for how large those amounts get). Ask about any liability clause you don’t understand, and keep a dated copy of what you sign.
If you’re only hiring someone to file a simple personal return, a short letter or an email confirming scope and fee can be enough. Don’t make it heavier than the job.
What should you do before you sign?
Read it twice, once for what it says and once for what it leaves out. Circle anything you don’t follow and ask for it in plain words. Take Nadia, a freelance designer in Vancouver, who found her letter covered her T1 but said nothing about GST/HST returns. One email later, they were added, with a price. She’d have missed a filing otherwise.
Ask for changes in writing, wait for a revised copy, and only then sign. A fair firm won’t mind. If you feel rushed, that’s worth noting before the first invoice, not after.
Can you change the letter later?
Yes, and you should when the job changes. If you incorporate, hire staff or register for GST/HST, the old scope no longer matches your life. Ask for an updated letter or a short written amendment, signed by both sides, so there’s no argument at tax time about who agreed to what. Keep every version, with the dates, in the same folder as your records.
How we checked the figures
The written-terms rule for audits comes from the Canadian auditing standards (CAS 210) in the CPA Canada Handbook, as described by CPA Canada resources. The CRA representative rules and the July 2025 change come from the CRA’s authorization pages on canada.ca. No single national rule sets what a tax or bookkeeping engagement letter must include, and the fee items are our own checklist. This site is independent of the CRA and CPA Canada.
Frequently asked questions
Is an engagement letter required by law?
For audits, CAS 210 says the terms must be agreed in writing. We could not confirm a single rule that covers every tax or bookkeeping job, so ask for one anyway.
Can my accountant deal with the CRA for me?
Only if you authorize them through the CRA. Tax preparers now request access for individuals through Represent a Client, and you can confirm it in your CRA account.
Should the letter list fees?
Yes. It should say whether the fee is flat or hourly, what counts as extra work and when invoices are due.
How long should an engagement letter be?
As long as the job needs. A simple personal return may need a short email, while a corporate year end needs a full letter.
What if the scope changes during the year?
Ask for a short written update to the letter. Changes agreed only by phone are hard to prove later.
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