Welcome to the first of our regular blogs on topical issues for accountants in practice.
Are your engagement letters up to date?
Once upon a time it was possible to have the same client engagement letter in place for several years, without too much upset.
However the pace of change in the various pieces of overlapping legislation (much of it of a whistleblowing nature) that impact on engagement letters, seems to be getting faster and faster. Different obligations under criminal law, tax law, company law and anti-money laundering that are now required in the typical contract with your client, mean that there is a never ending requirement to review your letters and issue revised and updated letters to your clients on an annual basis.
Here is a quick checklist of the legislation you need to include in audit, audit exempt and unincorporated/unregulated entity engagement letters:
Audit engagement letter under the Companies Acts:
Company law
· Companies Acts 1963 to 2013 (since 24 December 2013)
· Section 74 Company Law Enforcement Act, 2001
Criminal law
· Section 59 Criminal Justice (Theft and Fraud Offences) Act, 2001
· Criminal Justice Act 2011
Tax law
· Section 1079 Taxes Consolidation Act, 1997
Anti-Money laundering/terrorist financing
· Criminal Justice (Money Laundering and Terrorist Financing) Act, 2010 (effective since 15 July 2010 – replaces the previous references to the 1994 legislation)
· Criminal Justice Act 2013 (since 14 June 2013) – adds additional requirements to the 2010 legislation
Audit exempt engagement letter under the Companies Acts:
Company law
· Companies Acts 1963 to 2013 (since 24 December 2013)
Criminal law
· Section 59 Criminal Justice (Theft and Fraud Offences) Act, 2001
· Criminal Justice Act 2011
Anti-Money laundering/terrorist financing
· Criminal Justice (Money Laundering and Terrorist Financing) Act, 2010
· Criminal Justice Act 2013 (since 14 June 2013)
Engagement letter for unincorporated sole trader/partnership unregulated):
Criminal law
· Section 59 Criminal Justice (Theft and Fraud Offences) Act, 2001
· Criminal Justice Act 2011
Anti-Money laundering/terrorist financing
· Criminal Justice (Money Laundering and Terrorist Financing) Act, 2010
· Criminal Justice Act 2013 (since 14 June 2013)
In future issues of this blog, we will cover the typical legislative references required in engagement letters for more specialised entities like solicitor clients (reporting under the Solicitors Accounts Regulations of the Law Society), auctioneers, charities and insurance intermediaries.
If you would like complete templates of the different entity engagement letters mentioned here, available at €50 plus VAT each, please send us an e-mail to john@jmcc.ie with the words ‘engagement letter’ in the subject line.
