Your client agreement arrives in one of a few ways. A new client sends you their version and asks you to sign it before you start the work. You pull a template from your software provider and wonder whether it covers the risks your practice actually faces. Or a dispute has already started with a client who says you promised more than you delivered, and you are searching the file for what the engagement really said. Each of these is the moment to check the document properly, because the client agreement sets the terms of every engagement your practice takes on.
A client agreement, sometimes called a client services agreement or letter of engagement, is the contract between your accounting practice and each client. It records the services you will provide, the fees you will charge and the rules that govern the relationship. It is the document that displaces earlier emails, quotes and verbal promises, so it needs to be complete rather than a formality. For an accountant it also does work ordinary commercial contracts do not: it interacts with your professional standards scheme, your privacy obligations and the Australian Taxation Office's (ATO's) power to examine the returns you lodge. The clauses below are the ones that carry that weight.
The clauses your client agreement needs
The services you will actually provide
The scope of services clause is the backbone of the agreement. It sets out what you have agreed to do, the standard you will do it to, and what sits outside the engagement. The drafting choice that matters most is specificity: list the compliance work (tax returns, business activity statements, financial statements, payroll) separately from advisory work, name the entities and periods covered, and say plainly what you are not doing.
The traps here cause more downstream problems than any other clause. Watch for:
- "As requested from time to time" language: this invites a client to treat every request as included in the fixed fee.
- Verbal extras: work agreed by email or over the phone drifts into the engagement without any fee adjustment.
- Unstated exclusions: if a client later needs advice on a transaction or a dispute, there should be no argument that it falls outside the letter of engagement.
- Expired coverage: an agreement that does not state the period it covers can be read as continuing indefinitely.
A well-drafted clause will also commit you to performing the services with reasonable care and skill, and to doing so in a timely way. That commitment is worth making explicitly: it tells the client what standard to expect, and it gives you a defence when a client complains about timing after sitting on your requests for weeks.
How your fees are calculated
The fees clause fixes the price, the invoicing cycle, payment terms and what happens when an invoice is not paid. If your practice charges by the hour, state the rates and that they may be reviewed. If you quote a fixed fee, state what the fee includes and what it does not, including disbursements, lodgement fees and software costs. GST treatment should be spelled out rather than assumed.
The variant clients will push for is an estimate that reads like a cap. If you quote "approximately $4,000", the clause should say that an estimate is not a fixed quote and that additional work will be charged separately with your client's approval. The clause should also address:
- Interest on late payment: a rate and a trigger, so a slow-paying client does not become a free loan.
- Payment before lodgement: many practices require fees to be paid before a return is lodged, which prevents the client holding the work hostage.
- Work in progress on termination: how partly completed work is billed if the engagement ends early.
What the client must give you
Your client's obligations clause does the mirror work of the services clause. It requires the client to provide all information and documents needed to perform the engagement, to ensure that information is accurate, complete and up to date, and to make decisions promptly when you need them. An accountant works to statutory deadlines, and a client who produces documents two days before lodgement due date puts your compliance record at risk, not just theirs.
This clause matters because it allocates responsibility for delay. If the agreement obliges the client to respond within a reasonable time, a missed deadline becomes the client's problem rather than a claim of professional negligence against you. Consider making the obligation a condition of the engagement, so that a client's persistent failure to cooperate lets you suspend work or terminate the agreement without being in breach yourself.
Confidentiality and privacy
A confidentiality clause records your commitment to protect the client's confidential information, defines what counts as confidential and what does not, and sets out what happens to the information when the engagement ends. Your clients assume their financial affairs are confidential, so the clause should confirm that assumption while noting the limits: disclosure required by law, disclosure to the ATO, and disclosure to your professional indemnity insurer and software providers all need to be carved out.
Privacy is a separate layer. Under the Privacy Act 1988 (Cth), the Australian Privacy Principles (APPs) apply to APP entities, and a business with annual turnover above $3 million is an APP entity (see s 6D and s 15 of the Act). If your practice is an APP entity, your client agreement cannot override the APPs. Instead, the privacy clause should document how you collect, use and disclose personal information, point to your privacy policy, and record the client's consent to the specific uses the engagement requires, such as sharing data with your cloud software provider. Even if the small business exemption applies to you, a clear privacy clause is good commercial practice and is often expected by clients.
Where your liability stops
The limitation of liability clause is where accountants most often misunderstand their freedom to draft. You cannot simply write "no liability under any circumstances" and expect it to hold.
The Australian Consumer Law (ACL), which is Schedule 2 of the Competition and Consumer Act 2010 (Cth), makes some exclusions void. Section 64 voids any term that excludes, restricts or modifies the consumer guarantees. For services, s 64A gives you a limited carve-out: if the services are not of a kind ordinarily acquired for personal, domestic or household use, liability for failing to comply with a guarantee can be limited to supplying the services again or paying the cost of having them supplied again. Nothing in the contract can exclude liability for misleading or deceptive conduct under s 18 of the ACL, which applies to statements in your marketing, your quotes and your advice.
The more powerful protection for accountants comes from your professional standards scheme. Schemes approved under legislation such as the Professional Standards Act 1994 (NSW) cap the professional liability of eligible participants. The CA ANZ scheme, for example, limits the maximum amount that can be awarded in a claim against a participating member, with the cap set by the size and nature of the practice. The trap is the disclaimer. Participants must display the prescribed statement "Liability limited by a scheme approved under Professional Standards Legislation" on all client-facing materials, including stationery, emails and webpages. Failing to display it is an offence under the legislation and can mean the scheme does not cover you when a claim lands.
Your liability clause should therefore be drafted to work with the scheme rather than against it: a cap expressed as a multiple of fees or a fixed dollar amount, an exclusion of indirect and consequential loss where the law permits, and a requirement that the scheme disclaimer appear on the agreement itself. An indemnity from the client for information they provide that turns out to be wrong is also worth considering.
Tax returns and the ATO
Every income tax return is subject to examination by the ATO. The ATO's guidance on business records is direct about this: it may review a return and ask for copies of the client's records to check the information provided, and if the claims cannot be verified, it may adjust the return.
Your agreement should reflect that reality. The clause should state that all returns are subject to ATO examination, that the client must produce any documents needed to substantiate items in the return, and that the client is responsible for keeping the underlying records (the ATO expects tax return records to be kept for five years). It should also provide that if the ATO raises an enquiry or review that requires additional work, that work will be charged at your usual rates. This is the clause that prevents an ATO audit from becoming an unbudgeted favour to the client.
Contractor or employee?
If your practice is engaged as an independent contractor rather than employed, the agreement should say so and describe what that means. The clause should record that you may perform services for other clients during the engagement, that you have the sole right to direct the manner, means and method of performing the services, and that you may use employees and subcontractors to complete the work.
The characterisation matters beyond the wording. Following the High Court's decision in CFMMEU v Personnel Contracting [2022] HCA 1, the rights and obligations set out in the written contract are the starting point for deciding whether a worker is an employee or a contractor. A contract that reads like an employment arrangement but is labelled a contractor agreement can expose the client to superannuation, payroll tax and unfair dismissal claims, and can expose you to disputes about who is responsible for those obligations. The ATO's guidance on employees and independent contractors walks through the factors, including control and the ability to delegate. Your agreement should make the contractor relationship genuine in substance, not just in name.
What happens to documents and records
A client agreement should allocate ownership of the documents produced during the engagement. The client owns their source documents and the records they provide; your practice owns the working papers, internal analysis and software outputs you create. The clause should say this, and should address what happens when the engagement ends: the client's documents are returned or made available, your working papers stay with you, and any statutory retention obligations are noted.
The trap in this clause is the accountant's need to protect itself. If a client changes accountants mid-year, you should be able to hand over the client's records without handing over your working papers, and without exposing yourself to a claim that a delayed handover caused the client's late lodgement. A clause that obliges the client to request documents in writing and to pay any outstanding fees before release prevents the handover from becoming a bargaining chip in a fee dispute.
When the engagement ends
Termination is the clause practices skip and then regret. It should allow either party to terminate on written notice, allow you to terminate immediately for non-payment or material breach, and set out what happens to fees for work in progress when the engagement ends. Obligations that should survive termination include confidentiality, the liability limitations and the client's obligations to pay for work done.
Without a termination clause, a client who stops paying is still your client, and a client you want to shed for reputational reasons is still entitled to your services. With one, the exit is predictable and professional, which is usually better for the relationship than a slow-motion falling out.
Clauses worth adding for the right practice
Some clauses only earn their place in specific circumstances. Consider adding them when the trigger applies:
- AML/CTF compliance: from 1 July 2026, Australia's anti-money laundering regime extends to accountants who provide designated services, and those practices must enrol with AUSTRAC. A clause requiring clients to provide identification information and consent to verification checks belongs in the agreement if your practice is captured.
- Electronic communications: consent to communicate by unencrypted email, which protects you if a client's financial information is intercepted in transit.
- Suspension for non-payment: an express right to pause work while invoices remain outstanding, which is stronger than relying on general termination rights.
- Outsourcing and subcontracting: disclosure that work may be performed by employees, contractors or service providers, including offshore providers, with a confidentiality obligation on the provider.
- Personal guarantee: where the client is a company or a trust, a director's or trustee's guarantee of the fees makes the debt recoverable from someone with assets.
How an Artificer Legal practitioner would review your client agreement
When we review a client agreement for an accounting practice, we read it as a risk document, not a form. We would check whether the scope of services is precise enough to survive a dispute about what was promised, and whether the fees clause actually gets you paid. We would test the liability cap against the ACL and against your professional standards scheme, and confirm the prescribed disclaimer appears on the agreement, your emails and your stationery. We would look at whether the privacy and confidentiality clauses match how your practice actually handles client data, and whether the termination and document clauses protect you when a client leaves or stops paying.
If the agreement is being negotiated with a client who supplied their own version, the order matters. We would insist first on the scope of services, because it fixes everything else. Then fees and payment, because an agreement that does not get you paid is decoration. Then the liability and professional standards provisions, then privacy, termination and the rest. Our role is to make sure the document you sign is the document that protects you when the engagement goes wrong, not just the one that looked fine on the day.
Most disputes start with an unclear scope of services
If you take one thing from this article, it is that the scope of services clause decides most disputes before they begin. A client agreement with a vague scope will fail you regardless of how well the liability cap or termination clause is drafted, because every other clause is triggered by what the engagement actually covers. The practice that writes down precisely what it will do, what it will not do and what it will charge is the practice that can defend a negligence claim, recover its fees and exit an unhappy relationship cleanly.
The essentials, in short. The agreement should fix the services and the standard of care, the fees and what happens when invoices go unpaid, and the client's obligation to provide accurate information on time. It should protect confidential information consistently with the APPs where they apply, limit liability in the ways the ACL and your professional standards scheme actually permit, and confirm that returns are subject to ATO examination with the client bearing the cost of substantiation work. It should record a genuine contractor relationship if that is the arrangement, allocate documents and records, and set out a clean exit. A lawyer who knows the accounting profession's regulatory settings can put those pieces together in a single document that works for every client.