In this article
- Why every job needs an engagement letter
- Engagement letter format for chartered accountants: the 10 sections
- A sample letter you can adapt
- Audits are different: SA 210
- Getting it accepted and renewed
- A short note on client data
- Adapting the format to different services
- Common mistakes to avoid
- Questions people ask
- Sources
- An engagement letter says what you will do, what the client will do, what it costs and when it is paid.
- The "Not included" section prevents more fee disputes than any other part of the letter.
- Use one letter per service, not one letter for "all work".
- For audits, SA 210 sets out what the audit engagement terms must include; ICAI's AASB has an illustrative letter.
- Renew the letter every year with the fee revision, in the same one-page format.
"But I thought that was included." Every professional office has heard it, usually when nobody can find anything in writing. This guide gives you an engagement letter format for chartered accountants that any CA, CS, CMA or tax consultant's office can use: the ten sections every letter needs, a sample you can adapt, how to get it accepted, and what changes when the job is an audit.
A good engagement letter is short. One or two pages, plain words, sent before the work starts. It protects the client as much as it protects you.
Why every job needs an engagement letter
Many small offices skip the letter for "simple" work, like a yearly return or monthly bookkeeping. That is exactly where fee arguments start, because simple work has the most assumptions on both sides.
- The fee is agreed before the work, not argued about after it.
- Extra work is clearly extra, so you can quote for it without awkwardness.
- The client knows their own duties: documents, dates and approvals.
- If a question comes up later, you can show what you were asked to do, and what you were not.
What is not written down is remembered differently by each side. A letter takes ten minutes to prepare from a template. A fee dispute can take months and cost you the client.
Engagement letter format for chartered accountants: the 10 sections
Use this structure for any non-audit service. Keep each section to a few lines.
| # | Section | What to write |
|---|---|---|
| 1 | Parties and date | Your firm, the client's legal name, the contact person, the date |
| 2 | Scope | Exactly what you will do, for which period |
| 3 | Deliverables | What the client will receive: reports, filed copies, statements |
| 4 | Not included | Things the client may assume are included but are not, which you will quote for separately |
| 5 | Client duties | Documents and data by a date, approvals within a set time, telling you of changes |
| 6 | Timelines | When you will deliver, linked to the client's duties being met |
| 7 | Fees | Amount, what it covers, taxes as applicable, how extra work is charged |
| 8 | Payment terms | Advance if any, billing dates, days to pay, payment method |
| 9 | Confidentiality, records and limits | How you keep client data, what you rely on, what you do not verify, how records are returned |
| 10 | Term, ending and acceptance | How long it runs, notice to end it, and how the client accepts |
Client Handling & Fee Collection is 16 short lessons covering taking on clients, engagement letters, pricing, billing, polite collection and renewals, with ready letters included.
A sample letter you can adapt
Here is a sample for a monthly bookkeeping engagement. Replace the words in brackets and adjust to your service. Our Client Handling and Fee Collection course has ready letters for several common services.
- "Dear [Client name], thank you for asking us to maintain your books of account. This letter sets out what we have agreed."
- What we will do: record your sales, purchases, expenses, bank and cash entries in [software] every month from [start month], from the documents you send us, and share a monthly summary.
- What is not included: clean-up of periods before [start month], accounts of other businesses or family members, meetings with banks or lenders, and any filings. We are happy to quote for these.
- What we need from you: all bills, bank statements and cash details by the [date] of each month, and answers to our queries within [3] working days.
- Timeline: the monthly summary within [10] working days of receiving complete documents.
- Fee: Rs. [amount] per month, plus taxes as applicable, billed at the start of each quarter and payable within [7] days. Extra work is quoted before we start it.
- Confidentiality: we keep your information confidential and use it only for this work, and we return your records on request.
- Ending: either of us may end this with [30] days' written notice; we will hand over your data and records.
- "Please sign and return a copy, or reply 'I agree' to this email."
Notice what the letter does not do: it does not promise outcomes, it does not say "all accounting work", and it links every deadline of yours to a duty of the client's.
Audits are different: SA 210
For a statutory audit, the terms are not just good practice. SA 210, "Agreeing the Terms of Audit Engagements", issued by ICAI, deals with the auditor's responsibility to agree the terms with management and, where appropriate, those charged with governance. It is effective for audits of financial statements for periods beginning on or after 1 April 2010.
As summarised in ICAI's Checklist on Standards on Auditing, paragraph 10 of SA 210 requires the agreed terms to be recorded in an audit engagement letter or other suitable written agreement, and to include:
- the objective and scope of the audit of the financial statements;
- the responsibilities of the auditor;
- the responsibilities of management;
- the applicable financial reporting framework; and
- the expected form and content of any reports, with a statement that a report may differ from its expected form in some circumstances.
Support work before someone else's audit, such as preparing schedules, is a separate non-audit service. Give it its own letter so the client does not confuse it with the audit.
Getting it accepted and renewed
- Send it before work starts, ideally within two days of the first meeting.
- Accept a clear reply by email or WhatsApp for everyday non-audit work, and save it in the client's folder.
- Check what the job needs. Some engagements need a signed letter: where a law, a standard, a regulator, a bank or the client's board asks for it, or where the stakes are high. A WhatsApp reply never replaces that.
- Check authority. For a company, firm or trust, make sure the person accepting can act for the client.
- Renew every year with the fee revision, in the same format, and whenever the scope changes.
Explain it in one line on the phone: "I have sent a short note with what we will do and the fee, so there is no confusion later. Please reply when you have read it." Most clients appreciate the clarity.
A short note on client data
Your letter is a natural place to tell clients how you handle their personal data. The DPDP Rules 2025, notified on 13 November 2025, bring in a duty to give notice when personal data is processed on consent; that rule starts eighteen months after notification, around mid-May 2027. Rule 3 says the notice must be understandable on its own and written in clear and plain language, listing the personal data and the purpose. Whether a clearly marked section of your letter or a separate one-page notice works better for your office is worth asking a legal adviser. Much of a professional's work is also done to meet legal requirements, which the Act treats differently from consent, so have the exact wording checked. For the wider checklist, see Data Security for CA Firms: DPDP-Ready 12-Point Checklist.
Adapting the format to different services
The same engagement letter format for chartered accountants works across services; only the details change. A few examples of what to adjust:
| Service | Scope detail to add | Typical "Not included" |
|---|---|---|
| Monthly bookkeeping | Software, cut-off date for documents, monthly summary | Past-period clean-up, other entities |
| Yearly return filing | The year covered, from documents the client provides | Past years, replies to notices, revised filings |
| Company secretarial work | Which filings and registers, for which year | Changes in structure, new registrations |
| Advisory or project report | The question answered, the output and its use | Follow-up meetings beyond a set number |
Keep a template for each service you offer regularly, and keep them in one shared folder so the whole office sends the same version.
Common mistakes to avoid
- One letter for everything. "All tax and accounting work" invites the argument that everything is included. Use one letter per service.
- No "Not included" list. This is where most disputes come from.
- Deadlines without client duties. Your delivery date should depend on complete documents reaching you.
- Fee without payment terms. Say when the bill comes and when it is due.
- Letter sent after the work. By then it looks like a demand, not an agreement.
A clear letter is also the first step in polite fee collection; see How to Ask a Client for Payment Politely: 7 CA Scripts. If you are just setting up, How to Start CA Practice in India: A 6-Month Plan and our Starting Your Own CA Practice course cover the other systems to build early.
For the whole client journey, from taking on a new client to the yearly renewal talk, see our course on client handling and fees for professional offices. You can read the first lesson free, and the Office Subscription Plan gives every staff member who deals with clients this course and every other one.
Questions people ask
What should an engagement letter include?
At minimum: the scope of work, what is not included, deliverables, client duties, timelines, the fee, payment terms, how either side can end it, confidentiality and records, and how the client accepts it.
Is an engagement letter mandatory for chartered accountants?
For audits, SA 210 requires the agreed terms to be recorded in an audit engagement letter or other suitable written agreement. For other services it is strongly recommended good practice, because it settles scope and fees before the work starts.
Can a client accept an engagement letter on WhatsApp or email?
For everyday non-audit work, many offices accept a clear "I agree" by email or WhatsApp and save it in the client file. It does not replace a signature, board approval or the audit terms that a law, standard or regulator requires, and you should check the person can act for the client.
How often should an engagement letter be renewed?
Once a year is a good rhythm, along with the fee revision, and whenever the scope changes. For recurring audits, SA 210 asks the auditor to assess whether the terms need revising.
Should I use one engagement letter for all services?
No. One letter covering "all tax and accounting work" gives the client an argument that everything is included. Use one letter per service and a short addendum when the client asks for something new.
Sources
- ICAI AASB, Checklist on Standards on Auditing (June 2023 edition): SA 210, Agreeing the Terms of Audit Engagements, scope, effective date, paragraph 10 and paragraph 13 on recurring audits (ICAI PDF)
- ICAI AASB, Illustrative Audit Engagement Letter under the Companies Act, 2013 (17 December 2014)
- Digital Personal Data Protection Rules, 2025, G.S.R. 846(E), 13 November 2025, Rules 1 and 3 (MeitY Gazette PDF)
Read the first lesson of Client Handling & Fee Collection free. On the Office plan, everyone who talks to clients gets this course and all the others.
