APES 305:

Terms of Engagement Fact Sheet

Objective
APES 305 Terms of Engagement (the Standard) mandates that members in public practice document and communicate
the terms of engagement with their clients. Guidance is provided in respect of the general contents of an engagement
document.

Scope and application
APES 305 is effective for engagements commencing on or after 1 J uly 2013 and requires members in public practice in
Australia to comply with its mandatory requirements. For members outside of Australia the scope of APES 305 must be
followed to the extent local laws and/or regulations are not contravened. The revised Standard supersedes the Standard
issued in December 2007 and the revised Standard issued in J une 2009.

Terms of engagement for professional services
Members in public practice are required to document and communicate to the client the terms of engagement. It is not a
requirement that the engagement document take the form of a letter. Other acceptable methods of documenting and
communicating the terms of engagement are a handout, brochure, leaflet or electronic communication.

General contents of an engagement document
APES 305 discusses the general contents of an engagement document and provides guidance on matters that members
in public practice may consider for inclusion in an engagement document. These matters are noted below and can be
varied to meet the individual requirements and circumstances of an engagement:

purpose of the engagement
objectives of the engagement
scope of the engagement
engagement output
relative responsibilities of the member, the client and any third parties
involvement of other members in public practice
fees and billing arrangements
ownership of documents
confirmation by the client that the terms of the engagement document are understood.

Recurring engagements
A member in public practice may decide not to send an engagement document for recurring engagements each year
unless there is a change in circumstances such as:

the client misunderstands the objectives and scope of the engagement
any significant changes in the engagement
any significant changes in the professional services to be provided or the terms of engagement
a recent change of client management or ownership
a significant change in the nature or size of the clients business
any significant changes to professional standards or applicable accounting or auditing or assurance standards
any changes to legal or regulatory requirements.














APES 305:
Terms of Engagement Fact Sheet






Limitation of liability scheme
A member in public practice who is participating in a limitation of liability scheme is required to be familiar with the relevant
professional standards legislation and related obligations. APES 305 mandates that where the member in public practice
is a participant under such a scheme, the member must advise the client that the members liability may be limited under
the scheme.

Refer to the Standard for information concerning:

definitions
conformity with international pronouncements
features of a recurring engagement.










Disclaimer
The above material is only general in nature and not intended to be specific to the readers circumstances. The material does not relieve you of your
obligation, as a member of CPA Australia, to ensure that you comply with professional standards. To keep up-to-date members should visit the APESB
website at apesb.org.au.

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Issued May 2013