Court Case Confirms the Value of Engagement Letters

Source: Leader’s Edge

In a court of appeals case, City of Pontiac v PricewaterhouseCoopers LLP,  (Unpublished decision Docket # 275416, dated February 12, 2008), the defendant CPA firm was able to demonstrate that its services were provided pursuant to a specific engagement that was not part of the engagements of prior years. Since claims must be filed within two years of the “date of last service,” the claim was not valid.

Engagement letters should be used for every engagement (including 1040s) every year. Memorialize the date of last service through use of an end-of-engagement letter.

To read the complete article, click here and select the article "Levy v Martin Revisited: Court Case Emphasizes Value of Engagement Letters…from Start to Finish."

From Leader’s Edge: The Newsletter of the Michigan Association of Certified Public Accountants, March/April 2008, http://leadersedge.michcpa.org/marapr08.

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