The contracts you will sign as an accountant in Australia

Whether you are a sole practitioner taking on your first handful of clients or a partner in an established firm, contracts come with the job. Every client you onboard, every audit you run, every tax return you prepare and every advisory assignment you accept generates paperwork: engagement letters, audit agreements, tax preparation retainers, confidentiality deeds and consultancy contracts. Most of it is standard-form, and none of it is mysterious once you know what each document is for. But the agreements an accountant signs are not quite like the contracts a retail business signs with its suppliers. They sit on top of professional obligations that apply whether or not the paperwork mentions them, and the documents are where those obligations meet the commercial deal. This article explains the agreements you will most often encounter, what each one does, and when a quick legal check is worth it.

Why an accountant's contracts carry extra weight

At its simplest, a contract is an agreement the law will enforce. In Australia an agreement can be binding without a single signed page, provided there is an offer, acceptance, consideration (something of value passing between the parties) and an intention to be legally bound. That does not make written contracts optional in a professional practice. A written agreement records what was actually agreed in a form you can prove, which is worth a great deal when a client's memory of the scope of your work differs from yours.

The contracts you sign as an accountant also sit on top of obligations that exist independently of any document:

• Professional ethics: if you are a member of a professional accounting body, the APES 110 Code of Ethics applies to you, and confidentiality is one of its fundamental principles.
• Tax agent regulation: if you prepare tax returns or BAS for clients, the Tax Agent Services Act 2009 (Cth) applies. You must be registered with the Tax Practitioners Board to provide tax agent services for a fee, and the Code of Professional Conduct in that Act imposes obligations of honesty and integrity, independence and confidentiality that a contract cannot override.
• Auditing standards: if you audit, the AUASB Auditing Standard ASA 210 governs how the terms of the engagement must be agreed.
• Privacy law: if your practice handles personal information above the Privacy Act threshold, the Australian Privacy Principles apply to it.

The practical consequence is that a clause contradicting your professional obligations will not protect you. The documents are where you make your scope, your fees and your limits clear in advance, which is exactly why they are worth getting right.

Client engagement agreements for day-to-day accounting work

This is the agreement you will sign most often. When a client asks you to look after their bookkeeping, prepare management accounts or handle year-end compliance, the engagement is normally recorded in a letter of engagement or client service agreement.

A well-drafted engagement letter covers:

• Scope: the services you will provide and anything expressly excluded
• Client obligations: supplying complete and accurate records, information and documents on time
• Fees: how they are calculated and when they are payable
• Termination: how either side can end the relationship
• Liability: limits on your liability and how disputes will be resolved

The scope clause does the heaviest lifting. If a dispute later arises over a missed deadline, a penalty or an error, the first document anyone looks at is the scope you agreed. An accountant's duty of care in providing professional services is generally assessed by reference to the engagement, so the contract sets the boundaries of what you took on. A clause that says "provide accounting services" and nothing more invites a broader reading than you intended. Spell out what is included and, just as importantly, what is not.

Audit engagement agreements

Audits sit on a statutory footing. Under s 301 of the Corporations Act 2001 (Cth), a company, registered scheme, registrable superannuation entity or disclosing entity must have its annual financial report audited and must obtain an auditor's report. Small proprietary companies are generally exempt, subject to exceptions where they have raised funds under crowd-sourced funding rules or been directed by ASIC, which is why many small businesses never engage an auditor.

When you do take on an audit, ASA 210 Agreeing the Terms of Audit Engagements requires the terms to be agreed with the client and recorded in writing, normally in an audit engagement letter. The letter sets out the scope of the audit, the respective responsibilities of the auditor and of management, and the basis on which the report will be issued. Because the standard itself requires the written agreement, this is not a contract you can sensibly run on a handshake.

The engagement letter also records the level of assurance you are giving. A client may ask for "a check of the numbers" when what they actually need, or what their lender needs, is a full audit. The letter distinguishes the audit from a review or a compilation, and that distinction determines what you can be held to if the report is later relied on.

Tax preparation agreements

Preparing tax returns and BAS is a regulated activity. Under the Tax Agent Services Act 2009 (Cth), you must be registered with the Tax Practitioners Board to provide tax agent services for a fee or other reward, and individual registration depends on being a fit and proper person with the prescribed qualifications and experience, together with professional indemnity insurance.

The same Act applies a Code of Professional Conduct to registered tax agents and BAS agents. The Code requires you to act honestly and with integrity, to have arrangements in place to manage conflicts of interest and, unless you have a legal duty to do so, not to disclose information about your clients. A failure to comply can result in a caution, conditions on your registration, or suspension or termination of registration.

Your tax preparation agreement with each client therefore does two jobs. It records the commercial terms: the returns and lodgements covered, the fee structure and the timeline. And it records the client's obligations, most importantly to provide complete and accurate information. The Code's obligations run to you regardless of what the contract says, but the engagement letter is where you make it clear that the accuracy of the return depends on the accuracy of the records the client hands you.

Confidentiality and non-disclosure agreements

Confidentiality is where an accountant's obligations are easiest to misunderstand. As a registered tax agent, the Code of Professional Conduct already prohibits disclosing client information unless you have a legal duty to do so. As a member of a professional body, APES 110 treats confidentiality as a fundamental principle. And under the general law, a duty of confidence can arise in equity where information is imparted in circumstances of confidence, which describes most of what a client tells you. None of this depends on a signed document.

A non-disclosure agreement (NDA) is a separate contract that converts those background obligations into express promises, usually with defined exceptions for disclosures required by law or made to your professional advisers, your insurer or a regulator. You are most likely to be asked to sign one when a client is selling a business, seeking investment or working with patents or trade secrets, and wants to share sensitive information with you before engaging you.

Two practical points. First, an NDA often runs both ways: it may also protect the information you provide to the client, such as your methodologies and fee structures. Second, privacy law does related but different work. If your practice's annual turnover exceeds $3 million, the Privacy Act 1988 (Cth) generally applies to your handling of clients' personal information through the Australian Privacy Principles. Smaller practices usually fall within the small business exemption, though there are exceptions, so the starting question for any practice is which regime applies to it.

Consultancy and advisory agreements

Not every engagement is compliance work. A client may ask you to advise on a business purchase, a restructure, a financing decision or a problem found in their accounts. In that case the engagement is usually documented in a consultancy agreement rather than a standard service letter.

A consultancy agreement covers the same fundamentals, scope, fees and the client's obligation to provide information, but it places more weight on deliverables. It should state what advice you will provide, in what form (a written report, a series of meetings, ongoing advice), by when, and whether the client may rely on it for a specific transaction. It should also deal with who owns the advice. Under the Copyright Act 1968 (Cth), the person who creates a work generally owns the copyright in it, so you will usually own the report you write unless the agreement says otherwise. A clause that gives the client a licence to use the advice for the stated purpose, and no other, protects both sides.

The reliance point matters most where third parties are involved. The High Court has held that an auditor owes no duty of care to a third party such as a lender who relies on audited accounts in the absence of an assumption of responsibility (Esanda Finance Corp Ltd v Peat Marwick Hungerfords [1997] HCA 8). That is why engagement documents that say who may rely on your work, and for what purpose, are more than boilerplate: they determine who can sue you if the advice turns out to be wrong.

When a lawyer is worth the call

Most of the documents you sign as an accountant are standard-form, and for routine work your own templates will do. A straightforward client agreement for bookkeeping or compliance work, on normal terms, does not require a lawyer to review.

The calculus changes when something unusual appears. Consider getting a lawyer involved when:

• a client asks you to sign their NDA on terms you have not seen before, or that would bind you beyond the engagement
• an engagement is large or long-term, or involves a fixed fee that shifts risk onto you, or an indemnity in either direction
• you are asked to give advice that a third party such as a lender, a buyer or an investor will rely on
• you are drafting your own engagement templates and want the scope, liability and termination clauses to reflect how you actually work
• a dispute has already arisen, or a regulator such as the Tax Practitioners Board has contacted you

It costs nothing to check. Most firms, including Artificer Legal, offer an initial consultation, and a five-minute description of the engagement is usually enough for a lawyer to tell you whether the document needs work or is fine as it stands.

Where the paperwork and your professional obligations meet

The client engagement letter, the audit engagement agreement, the tax preparation retainer, the NDA and the consultancy agreement are the paperwork backbone of an accounting practice. Read together, they record the scope of the work you have agreed to do, the terms on which you will do it and the limits of what you are responsible for. The most useful way to think about them is this: the documents do not create your professional obligations from scratch. Confidentiality binds you through the Code of Professional Conduct, through your professional body's ethics code and through the general law whether or not you sign an NDA, and the audit standards and the Corporations Act apply whether or not your letter says so. What the paperwork controls is the part that is genuinely yours to decide: how wide your scope is, what you charge and who is entitled to rely on your work. When a clause would have you promise something your professional obligations would not allow, or extend your scope beyond what you intend, that is the document to stop and get checked before you sign.