CPA’s Guide to Effective Engagement Letters: Implementing Successful Loss Prevention Practices, Seventh Edition

By Ron Klein, Ric Rosario, and Suzanne M. Holl

Published by CCH; 773 pages (includes CD-ROM); paperback; $137, 10% discount ($123.30) if purchased online at www.camico.com; 20% discount ($109.60) for Camico members ordering online at members-only website; ISBN: 978-0-8080-9086-0, ISSN 1539-5219

Reviewed by Henry J. Krostich

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FEBRUARY 2008 - This volume, the latest edition of the only published work devoted (nearly) entirely to creating engagement letters for the accounting profession, is about 50% thicker than the fourth edition this reviewer is most familiar with. The added pages include, in addition to updated material, more sample letters on various current subjects, including an engagement letter for remote-access bookkeeping services. And while not exactly engagement letters, some samples could be used with clients related to the theft of electronic data from the accountants’ office and on obtaining a client’s permission on outsourcing tax-preparation services (potentially outside of the United States). New sections discuss communicating internal control issues to clients and developing a firm’s record-retention policy. The authors have also upgraded the former appendix on disengaging from clients; it now has its own chapter.

This book was, and remains, a must-have for all accounting professionals. The understanding established between an accountant and a client, and the documentation of this relationship, continue to make a proper engagement letter more important with each passing year.

As discussed in my previous review, earlier editions had a significant shortcoming. The authors warned readers not to use the book, and the included samples, as a “forms book,” because each engagement letter needed to be crafted for the specific conditions it was intended to address. I believed then, and continue to believe, that too many practitioners will be tempted to take the sample letters, included on a conveniently provided CD-ROM, and do just that: Copy the letter, add the proper name and address, and—voila, done! In this edition, the authors have not made any attempt to address this issue. The authors’ instructions, which have not been modified from the earlier reviewed edition, continue to warn the user not to use the very tools they provide.

The CD-ROM also includes many sample paragraphs, which in the printed material are notated with the authors’ comments and suggestions on how or when to use each one as a building block in creating a properly crafted engagement letter. As was hoped for more than five years ago, these building blocks can be tied together to provide a software application that would enable the practitioner to easily choose appropriate selections from the suggested wording for each area of the engagement letter, and thereby assemble a truly customized result. I have seen at least one attempt at such an engagement letter wizard by a major vendor of a working paper software application, but it did not go far enough into the ability to customize the letter, nor did it have the benefit of the extraordinary depth of material that the CPA’s Guide to Effective Engagement Letters has.

Until such a product is developed, the user must continue to heed the authors’ advice to properly tailor each engagement letter, so as to properly communicate the understanding reached between accountant and client.


Henry J. Krostich, CPA, is managing partner of Krostich & Krostich, LLP, Roslyn Heights, N.Y. He is a former member and past chair of the NYSSCPA Peer Review Committee and a former member of the AICPA Peer Review Board. He currently serves on the New York State Board for Public Accountancy. His review of the fourth edition of this book appeared in The CPA Journal in November 2002.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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