- APES 305 Terms of Engagement
APES 305 Terms of Engagement
Content Summary
Objective
APES 305 Terms of Engagement mandates that members in public practice document and communicate the terms of engagement with their clients. Guidance is provided in respect of the general contents of an engagement document.
The revised APES 305 (December 2020), which is effective for engagements commencing on or after 1 July 2021, requires members in public practice in Australia to comply with its mandatory requirements. For members outside of Australia the scope of APES 305 must be followed to the extent local laws and regulations are not contravened.
- Members in public practice are required to document and communicate to the client the terms of engagement. It is not a requirement that the engagement document take the form of a letter. Other acceptable methods of documenting and communicating the terms of engagement are a handout, brochure, leaflet or electronic communication.
Members in public practice are required to document and communicate the details of the outsourced service provider, the geographical location of where the outsourced services will be performed and the nature and extent of the outsourced services to be utilised when they utilise outsourced services in the provision of professional services to their clients.
APES 305 discusses the general contents of an engagement document and provides guidance on matters that members in public practice may consider for inclusion in an engagement document. These matters are noted below and can be varied to meet the individual requirements and circumstances of an engagement:
- purpose of the engagement
- objectives of the engagement
- scope of the engagement
- engagement output
- relative responsibilities of the member, the client and any third parties
- involvement of other members in public practice
- fees and billing arrangements
- ownership of documents and data
- confirmation by the client that the terms of the engagement document are understood.
A member in public practice may decide not to send an engagement document for recurring engagements each year unless there is a change in circumstances such as:
- the client misunderstands the objectives and scope of the engagement
- any significant changes in the engagement
- any significant changes in the professional services to be provided or the terms of engagement
- a recent change of client management or ownership
- a significant change in the nature or size of the client’s business
- any significant changes to professional standards or applicable accounting or auditing or assurance standards
- any changes to legal or regulatory requirements.
- A member in public practice who is participating in a professional standards scheme is required to comply with the relevant professional standards legislation and applicable regulations of their professional body. APES 305 mandates that where the member in public practice is a participant under such a scheme, the member must advise the client that the member’s liability may be limited under the scheme.
- definitions
- conformity with international pronouncements
- features of a recurring engagement