Which of the following is true of an engagement letter?
A) It is addressed to the expert, to establish an agent relationship.
B) It cannot be amended once signed by both parties.
C) It is a necessary requirement for litigation services as per the AICPA's professional standards.
D) It establishes the nature of an engagement and any protections attached therewith.

Question

Quizplus · Accepted Answer

An engagement letter establishes the nature of an engagement and any protections attached therewith. It outlines the terms and conditions of a professional engagement between a client and an accountant, lawyer, or other professional, and it helps to prevent misunderstandings and disputes about what services will be provided and how they will be delivered. The engagement letter can be amended with the agreement of both parties, and while it is often used in the context of litigation services, it is not universally required by the AICPA's professional standards. Choice A is incorrect because an engagement letter is typically addressed to the client, not the expert. Choice B is incorrect because an engagement letter can be amended with agreement from both parties. Choice C is partially incorrect because while an engagement letter is often used in connection with litigation services, it is not always required by the AICPA's professional standards.

Which of the Following Is True of an Engagement Letter