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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, CAS 210 says the terms must be agreed in writing. For a tax return or bookkeeping job, no single rule sets the content, so 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.
For a personal account, the CRA’s page on giving authorization (dated June 30, 2026) calls adding the representative yourself in My Account under Profile the fastest way. A representative with a RepID can also send a request through Represent a Client, which you then confirm in My Account. Mailing Form AUT-01 gives offline access only. Since July 15, 2025, preparers can no longer use the Authorize a Representative function in EFILE software for individual clients, as the CRA tax tip explains. Business clients are not affected by that change.
So if a letter promises access, ask which route the firm uses, which level of access it needs and for how long, and check what you approve in your own CRA account. Our page on what a small business tax accountant does shows where those duties usually sit.
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 (the payroll remittance calculator shows how large those amounts get). Ask about any liability clause you do not understand, and keep a dated copy of what you sign. For records the firm will ask you for, see CRA record keeping requirements.
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.
Where did we check this?
In November 2026 we read the CRA page on how to give authorization, last dated June 30, 2026, and the CRA tax tip on the July 2025 change, and we found no later reversal. 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, which we did not re-read this month. 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, the Canadian auditing standard 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. Even a short email confirming scope, fee and deadlines gives both sides something to point to later.
What should an accounting engagement letter list?
It should name the job, the tax year and the forms, such as a T1, a T2 or GST/HST returns. It should say what you supply and by when, what the firm prepares and files, how fees work, what counts as extra work, what access to the CRA the firm needs and how either side can end the deal.
Should the letter list fees?
Yes. It should say whether the fee is flat or hourly, what counts as extra work, such as an amended return or a CRA letter, and when invoices are due. Ask whether a CRA review or reassessment is covered by the flat fee or billed separately. No official source sets a fair fee.
How does an accountant get access to my CRA account?
For a personal account you can add the representative yourself in My Account, or confirm a request they send through Represent a Client. Since July 15, 2025, preparers cannot use the EFILE Authorize a Representative function for individual clients. Check which level of access the letter assumes before you approve it.
What if the scope changes during the year?
Ask for a short written update to the letter, signed by both sides. Incorporating, hiring staff or registering for GST/HST all change the job. Changes agreed only by phone are hard to prove later, so keep every version with its date in the same folder as your records.
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