Issuing documented terms of engagement for every engagement would become mandatory, under new proposals from the Accounting Professional & Ethical Standards Board (APESB). An exposure draft was issued at the end of May, outlining details of APES 305 Terms of Engagement, which is set to replace existing Miscellaneous Professional Statement APS 2. 
 
Broadly, the Institute is supportive of this exposure draft, and has always advocated issuing terms of engagement for all engagements. It represents good commercial practice, removing any area of doubt and offering protection to members. Indeed, a large number of members already follow best practice guidance, and issue engagement documentation at all times.  
 
What constitutes terms of engagement documentation? 
These terms of engagement do not necessarily have to consist of a formal letter. The exposure draft leaves the possibility open for email communications or even giving clients standard engagement information sheets (where appropriate). 
 
What is contained in the standard? 
The proposed standard includes mandatory requirements and guidance on the general contents of an engagement letter, recurring engagements and in relation to limitation of liability. 
 
Institute submission 
The Institute expects to make a submission on this exposure draft in September, and welcomes comments from members in relation to this. Comments can be directed to the Institute's professional standards team via email. If members wish to submit comments directly to the APESB, they should do so before 14 September 2007. Details on how to comment are in the exposure draft. 
 
Institute guidance 
The Institute provides guidance on engagements in its free quality control guide and its free dispute resolution toolkit. Sample terms of engagement documents can be found in the Institute's free practice work papers. 
 
For more information

• APESB: current exposure drafts