Thank you for instructing us to act as your accountants and business advisers.   To ensure that there are no misunderstandings regarding the nature and extent of the services that we will provide to you, this letter together with the attached Service Requirements Checklist, record the entire agreement between us in relation to our engagement.

Terms of Engagement

On the basis of information and instructions you provide, we will compile any required financial statements for you.  This engagement will be performed in accordance with Service Engagement Standard No. 2 Compilation of Financial Information (SES-2) issued by Chartered Accountants Australia + New Zealand.  SES-2 specifies that on completion of the engagement we will issue a compilation report and an appropriate disclaimer which will form part of the financial statements.  The services to be provided will include all matters ancillary to those services such as, for example, dealing with and responding to queries raised by the Inland Revenue Department.  This letter of engagement will apply in respect of your financial year ended 31 March 2021 and for future years.

Extent of Services

We will not audit, review or carry out any other checks on the accuracy or completeness of the information you provide.  It is up to you to give us accurate and complete information to enable us to provide the services described in this letter and we accept no liability for the accuracy or completeness of any information supplied by you in any form.  Accordingly, no assurance on any assertions contained in the financial information compiled will be provided.

Our engagement does not include the investigation or discovery of internal control weaknesses, errors, illegal acts or other irregularities, including without limitation, fraud, or non-compliance with laws and regulations.   However, we will inform you of any such matters which come to our attention during the course of our engagement.

The information you are to supply and any other information that we consider necessary to complete the engagement must be provided in a timely manner in order for the assignment to be completed on a timely basis.

If the services to be provided include tax compliance services then the following will apply:

• You may use our office address as the mailing address for assessments and/or correspondence from Inland Revenue.  If you do this we will send you copies of any letters received along with recommendations for your reply if necessary.
• If you use our office address as the mailing address for assessments we will check the assessments and let you know the amounts and due dates of tax instalments.  You are then responsible for paying the correct tax on time.
• We will advise you about any amounts of tax to be paid and the due dates for payment.  If your tax seems to have been overpaid at any time we will make a refund claim on your behalf.
• In the case of tax compliance services our function is limited to providing you with information and advice to aid you in making decisions about your tax.  However, the ultimate responsibility for making those decisions remains with you.
• You are responsible for what appears in your tax returns.  This means you must ensure that the information you give us is accurate and complete.

• If you choose to use your own address as the mailing address for assessments and/or correspondence from Inland Revenue we recommend that you provide us immediately with copies of any correspondence you receive from Inland Revenue.  This is because there may be a deadline for reply that you are unaware of.

You are ultimately responsible for paying any Inland Revenue Department penalties arising from late payments, errors, wrong estimates or any other reason. However, if any penalties are incurred directly due to our error or omission, then we are responsible for such penalties.

For clients that are companies, the directors are responsible for keeping the applicable company records at the registered office as required by the Companies Office.

Independence

Independence is not required for a compilation engagement.  If we are aware that we are not independent of the entity for which we are preparing financial statements, this fact will be stated in our compilation report.  However, we will not conduct a comprehensive review to determine whether we are or are not independent of the entity.

 

Use and Distribution of the Financial Information

We understand that the intended use and distribution of the financial information we will compile is for the special purpose management reporting and of calculating income tax.  For this reason the reports we generate will be special purpose financial statements prepared in accordance with the Special Purpose Framework for use by For-Profit Entities (SPFR for FPEs).  If this should change in any material respect, you will inform us immediately. 

You may make copies of any reports for your own internal use or for providing to a third party.  However, we accept no duty or responsibility to any party other than yourself who may seek to rely on our reports and furthermore you indemnify us against any claim by such other party in respect of the reports.

Information and Disclosure

All assignments will be conducted in accordance with the professional standards, rules and ethical requirements of Chartered Accountants Australia + New Zealand.  Information we obtain in the course of this engagement is subject to confidentiality requirements, in addition to our obligations under the Privacy Act 2020.  We will comply with the Privacy Act 2020 when collecting, storing, using and sharing your personal information.  We will not disclose that information to other parties without your express consent, except as required by law or professional obligations including:

• the provisions of the NZICA Code of Ethics that apply if we become aware of actual or potential ‘noncompliance with laws and regulations’ (NOCLAR).
• Where any such non-compliance poses substantial harm (such as adverse consequences to investors, creditors, employees or the public), we may be required to disclose the matter to an appropriate level of management or those charged with governance and/or an appropriate authority.
• the provisions of the NZICA Rules and Professional Standards that subject us to practice review, trust account audits, investigations and disciplinary procedures.

These rules require us to disclose to NZICA, it’s practice reviewers and/or it’s disciplinary bodies our files and workpapers including client information. In accepting this engagement you acknowledge that, if requested, our files related to this engagement, may be made available to NZICA, it’s practice reviewers and/or it’s disciplinary bodies. Employees and contractors of NZICA are also bound by confidentiality under contract and by the NZICA Code of Ethics.In order for us to perform your assignments efficiently we require authority to liaise with both the Inland Revenue Department and other financial institutions that you are connected to.  An Authority to Disclose and Receive Information form for each entity and individual is attached to this letter which we need signed and returned to us.

Limitation of Liability

At all times we will use reasonable skill and care in providing our services to you.  However, in spite of this our liability to you whether in contract, tort, equity or otherwise, for any loss or damage or expenses (including legal costs) suffered or incurred directly by you as a direct result of any act or omission by us in providing our services, shall be limited to a maximum amount equal to the fee (excluding GST, disbursements and expenses) paid to us by you in respect of the services in question.  If the Services were provided in respect of more than one financial year the fee on which the liability amount is based shall be the fee paid in respect of the financial year in respect of which the act or omission occurred.   Any claim against us must be brought within twelve months of the date on which we complete the services.

Fees and Payment

Unless otherwise agreed with you in writing our fees are calculated on the basis of the time spent on the assignment by our team and on the levels of skill and responsibility involved.  If required by you we will provide you with either an estimate, or firm quotation, of the fees involved prior to commencing an assignment.

Our invoices will generally be issued on a monthly basis and all invoices will be due for payment on the 20th of the month following invoice date.  We reserve the right to charge interest on overdue amounts at a maximum rate of 15% per annum.

You should be aware that, like all other providers of services, we are entitled to retain possession of your records that have been used in relation to this engagement until outstanding fees are settled.

Anti-Money Laundering and Countering Financing of Terrorism

From 1 October 2018, all New Zealand accounting practices became subject to New Zealand's Anti-Money Laundering and Countering Financing of Terrorism Act 2009. Where we are required to conduct customer due diligence, this Act does not allow us to act, or continue to act, for our clients unless we have conducted that due diligence.  Accordingly, we may be required to verify your identity for the purposes of the anti-money laundering laws. We may request from you such information as we require for these purposes and make searches of appropriate databases.

Authorisation

So that we comply with the Privacy Act 2020, the Tax Administration Act 1984 (to the extent that it applies) and any other law relating to privacy while providing services to you, you agree to complete and execute the Authority to Disclose and Receive Information forms attached to this letter.  We may ask you for other authorisations if necessary.

Money We Hold for You

We may sometimes hold money on your behalf.  It will be held in trust in a client bank account, which is completely separate from the firm’s funds. Chartered Accountants Australia + New Zealand has strict rules about the way accountancy firms must handle their clients’ money and we follow these rules.

Ownership of Work Papers

Material that you provide to us remains yours and will be returned to you when the engagement is completed.  Work papers that we create remain our property.

Where we provide taxation services for you we will store tax records that we hold on your behalf for a period of seven years after the applicable balance date.  At the end of that period, unless you ask us to send that information to you, the records will be destroyed using a secure document destruction service.

Non accounting advice and financial advice

This firm does not provide legal or financial advice.  Any opinion expressed should be confirmed by the appropriate professional.  Any comment made on the subject of legal or investment matters should be interpreted as only a personal view and not professional advice. 

Conclusion

If you have any questions regarding this letter of engagement please do not hesitate to call us.  It is a requirement of Chartered Accountants Australia + New Zealand that we provide you with this letter and that you return a signed copy to us.  In order to signify your acceptance of the terms of engagement.

 

We appreciate your business and thank you for engaging us.

 

Yours faithfully

 

Bruce L Clare

Principal

Clare & Associates Limited

5. Agreement Modification