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Issue link: https://cpapracticeadvisor.epubxp.com/i/411648
November 2014 • www.CPAPracticeAdvisor.com 15 Engagement let ters shou ld be issued to new clients at the beginning of the practitioner/client relationship and reviewed annually for existing customers. If the scope of services, terms and conditions or charging fees change, practitioners should draf and send rev ised engagement let ters refecting this change. Also, if a sole practitioner changes to a partnership or a client incorporates or merges with another business, a new engagement leter should be sent. Separate engagement leters should be sent to each client to whom you provide service such as a company and its shareholders and directors or a partnership and each of the indi- vidual partners. However, if a service is provided to a group of companies, a single leter can be sent to the parent company if the engagement letter clearly specifes that services to all the members of the group are covered. Te leter will also need to defne and list each member of the group. Since engagement letters can be considered enforceable contracts if a dispute arises, professionals want to be sure to explicitly defne the terms and limitations of the service they are prov id i ng. To do t h i s , a q u a l it y engagement letter will include the following elements: • TERMS OF SERVICE: Te engagement leter will spell out clear terms of the contract between the payroll practi- tioner and the client. It will detail spe- cifcally which services are the payroll practitioner will provide. • EXCLUSION CLAUSE: Payroll practi- tioners may manage the entire payroll process or just specifc services for their clients. In either case, an exclusion clause will identify any services that the practitioner will not provide such as independent contractor classifcations, labor regulations or Employee Retire- ment Income Security Act compliance. • DUE DATES: Practitioners should establish a list of important dates and provide clients with a list of dates by which certain information must be provided to the practitioner. • STOP-WORK PROVISIONS: Payroll practitioners should outline a stop-work clause, which would be used in cases of nonpayment, conficts of interest or unethical behavior. • PROFESSIONAL STANDARDS: Clients may not always know what is acceptable or required for compliance with laws and regulations. Terefore, it's impera- tive to include clauses that outline professional standards and tax positions that need to be considered. • RECORD RETENTION: Te engagement leter should address the expectation of clients to properly and accurately retain their own records. If necessary, include guidelines for the length of time records should be maintained and how they should be kept. • LIMITATION OF LIABILITY, CONSE- QUENTIAL DAMAGE DISCLAIMERS AND PERIOD TO FILE A LAWSUIT: Tese clauses will vary by state, but in the case any issues arise, they should be spelled out in the engagement leter. • ALTERNATIVE DISPUTE RESOLUTION: Te engagement leter should address how disputes are to be handled and if alternative dispute resolutions are optional. As you plan to send out engage - ment leters to your clients in prepara- tion for next year's services, keep in m i nd t hat t he engagement let ter serves to set the tone for the services provided. A Year in the Life of a PAYROLL Accountant is sponsored by SurePayroll and ADP Connect to ADP ® At ADP, we're all about connections — connecting accounting professionals like you to the right resources and opportunities to support your frm's objectives: • Give your clients access to big-business payroll and HR solutions by referring them to ADP • Generate more revenue and simplify payroll processing with our customized platform for accountants • Discover other segments to invest in or retire sooner by selling your client payroll base to ADP When you partner with ADP, you also connect to integrated HR products, retirement and more — everything your clients need to help protect and grow their business. For more information, visit adp.com/accountant or call 1-855-408-3751. The ADP logo and ADP are registered trademarks of ADP, LLC. Copyright © 2014 ADP, LLC. HR. Payroll. Benefts. Accountant's Checklist for November What's in Your Payroll Client Engagement Letter? By Taija Jenkins, Assistant Editor C lient engagement letters serve to outline the scope of service a pay- roll practitioner will provide to clients. They usually detail the ser vice provided, the amount of risk present and professional standards. ✓ Schedule any year-end reports that need to be sent to other departments. ✓ Suggest clients send memos to employees with the next year's paydays, the new Social Security taxable wage base, 401(k) pretax limit and sate unemployment/disability wage bases and fling frequency. ✓ Create a fling system for next year's fles. ✓ Start preparing for year-end mailings (i.e. check postage inventory, notify mailroom of the expected outgoing mail volume, etc.).