A client engagement letter which clearly sets out the terms and scope of work to be done is a must-have for any accountant. A signed engagement letter ensures you are covered in the event of a fee dispute, a professional indemnity insurance claim or a tax audit. It’s also strongly recommended by the Accounting Professional & Ethical Standards Board, the Tax Practitioners Board and CA ANZ.
But as important as an engagement letter is, staying on top of the process can be time consuming. The accountant usually has to produce and email a Word or PDF document with client-specific details and send an updated letter if the scope of work changes – not to mention renewing the engagement letter at least once a year to ensure they’re covered for any additional work that’s been undertaken.
“If you’re managing 500 clients and you’re having to manually type out engagement letters for each one of those, it’s just such an admin burden that the vast majority of firms haven’t been doing it,” says Ethan Cooney, head of strategic partnerships at Practice Ignition software.
Automating the process
Recognising this, Practice Ignition has formed a partnership with CA ANZ to automate the process and eliminate the administrative burden for practising accountants.
The platform digitises client engagement, onboarding and payment collection. Accountants can create a dynamic digital proposal for new or existing clients which customises each engagement letter and clearly spells out the scope of the work to help mitigate risk of scope creep before it occurs.
It also incorporates the latest CA ANZ engagement letter template, ensuring practitioners are fully compliant with industry guidelines and are automatically updated with any changes to guidance. The client digitally signs and accepts the proposal which includes the letter of engagement, scope of work and payment schedule, and it allows clients to input their payment details in the context of the proposal.
“Any CA ANZ member who is wanting to stay compliant with the legislation and the guidance and recommendation from the professional bodies can make use of the product and the partnership,” Cooney says.
General ledger integration
The Practice Ignition platform takes things a step further. Once a proposal has been accepted, invoices are raised, reconciled and marked as paid in the firm’s cloud accounting ledger upon automated payment collection.
It also integrates the job into the firm’s workflow management software to ensure tasks can get started immediately, with no work commenced before an engagement is signed.
Rebecca Mihalic CA, the Sydney director of accounting practice BusinessDEPOT, particularly likes the workflow management integration.
“It’s really good because it means that when a client signs an engagement, there’s no risk of us forgetting to do something or of them falling into the cracks,” says Mihalic, who is also the head of accounting at Practice Ignition.
“When a client signs an engagement, there’s no risk of us forgetting to do something or of them falling into the cracks.”
In addition to producing engagement letters, the firm uses the platform to set out the scope of work for clients and what it will charge. In most cases, it also collects payment details, which Mihalic says has boosted her firm’s cash flow and helped eliminate debtor issues.
“It would save our administrator probably about a day and a half a week not having to manage and double check the workflow and not having to manually raise invoices and chase payments,” she says.
Sign up for a 14-day trial
Visit landing.practiceignition.com/caanz to start your 14-day free trial and access the exclusive offer for CA ANZ members.
Or request a call to learn more about how the partnership can benefit you.