The accountant needs to establish an understanding with the client about the terms of the engagement, any limitations on the use of the financial statements, and the understanding through a written communication with management.

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It is important for the accountant to establish clear communication with the client about the terms of the engagement and any limitations on the use of the financial statements. This should be documented in a written communication with management to ensure mutual understanding and to avoid any misunderstandings or disputes later on.

The Accountant Needs to Establish an Understanding with the Client