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For valuation engagements

A Canadian appraisal engagement letter that fixes the intended use

Almost every dispute about a valuation is a dispute about what it was for. The engagement letter is where that is decided, in advance, in one sentence.

A value is meaningless without its purpose. The same asset is worth different amounts for a sale, a tax filing, a matrimonial settlement, an insurance claim and a set of accounts, and a report prepared for one of those is misleading if it is used for another.

Last reviewed against 3 primary sources.

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Appraisal engagement letter

The full letter in Word and PDF, written for Canada, covering intended use, the standard of value and the scope of work.

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Type in your firm, the client, the scope and the fee, and it writes a complete engagement letter for Canada, ready to print or save as a PDF. Nothing you type is stored.

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So the appraisal letter does something the others do not: it names the intended users, and it says plainly that nobody else may rely on the report. That single clause prevents most of the trouble in valuation work.

The five things a valuation letter must fix

  1. 1

    The intended use, and the intended users

    Both, by name. The report is prepared for a stated purpose and for stated users, and the letter says that no other party may rely on it and that it may not be used for any other purpose.

  2. 2

    The standard of value

    Fair market value, fair value, investment value, liquidation value — these are different numbers with different definitions, and the client will not distinguish them unless you do.

  3. 3

    The effective date

    A valuation speaks as at a date, which is frequently not the date of the report. Say both, and say that events after the effective date are not reflected.

  4. 4

    The scope of work, and its limits

    What you will inspect, what you will accept from management, what you will not verify. A desktop valuation and a full appraisal are different engagements and should never be confused in correspondence.

  5. 5

    The report type and who may see it

    Comprehensive, estimate or calculation, the three report levels in the CBV Institute's standards. Restrictions on distribution, publication and attachment to any document, together with what happens if the client wants that.

The appraisal engagement letter

Written for Canada. The downloads are the same text, as a Word document to edit and a PDF to put on your letterhead.

[Firm letterhead]

[Date]

[Client name]
[Client address]

Dear [Client contact],

The engagement

We will estimate the [standard of value] of [describe the subject asset, business or interest, including the percentage interest and whether it is controlling or marketable] as at the effective date of [date].

Intended use and intended users

The valuation is prepared solely for [the stated purpose] and solely for the use of [named intended users]. It may not be used for any other purpose, and no other party may rely on it.

The report may not be distributed, published, quoted from, or attached to any other document, in whole or in part, without our prior written consent.

Scope of work

Our work will include [document review, management interviews, inspection or its absence, market and industry research, and the approaches to value we expect to consider].

We will rely on financial and other information provided by management without auditing or verifying it. This is not an audit, a review or a compilation, and we express no assurance on any financial information.

The effective date

Our conclusion will be as at [date]. Events occurring after that date are not reflected, and we have no obligation to update the report for anything that happens afterwards unless separately engaged to do so.

The report

We will issue [a Comprehensive Valuation Report / an Estimate Valuation Report / a Calculation Valuation Report], which will set out the information relied on, the assumptions and limiting conditions, the approaches considered, and our conclusion. A calculation of value is not a conclusion of value and the report will say so.

Fees

Our fee is [amount] in Canadian dollars, invoiced [when] and payable within [number] days. Our fee is not contingent on the conclusion reached, on the occurrence of any transaction, or on any other outcome. Testimony and any update are charged separately at [rate].

Confidentiality and retention

We keep the engagement and the information you provide confidential except where the law, a court or our professional body requires disclosure. We hold information in accordance with PIPEDA or its provincial equivalent and retain our file for [number] years.

Agreement

Please sign and return a copy before we begin.

[Name], [Firm name]

Agreed by [Client name]:

Signature ______________________ Date ____________

Before you use this

Supplied as-is, with no guarantee. These templates are general information, not legal advice, and not a substitute for it. Have your own legal adviser review and adapt one to your practice and your jurisdiction before you put it in front of a client. FirmHello accepts no responsibility or liability for any use made of them.

The Canadian standards an appraisal letter answers to

Canada's valuation standards changed recently. The CBV Institute's updated Practice Standards apply to engagements beginning on or after January 1, 2026, and the 2026 edition of CUSPAP took effect on April 1, 2026. A letter drafted before either date may cite superseded requirements.

Where the value will be used for tax, the CRA's approach to fair market value shapes the transaction documents as much as the report.

Business valuations from 2026

The CBV Institute's framework, now including a Practice Standard No. 100, keeps three report levels (Calculation, Estimate and Comprehensive) and expects the scope of work to be driven by the intended purpose and users. Name the level in the letter.

Opting into IVS

CBV practitioners may opt into the International Valuation Standards in place of Practice Standards 100 to 130. If you do, the letter should say so, because the client and every reader will judge the report against the standards it names.

Real property and CUSPAP

Members of the Appraisal Institute of Canada must comply with CUSPAP on every professional services assignment, from real property appraisal to reviews and consulting. Cite the current edition rather than one carried over from an old template.

Price adjustment clauses

The CRA accepts a price adjustment clause if the parties genuinely intend fair market value, set it by a fair and reasonable method, agree to use a CRA or court value, and actually adjust the price. Say whether your report is meant to support one.

How valuations get misused

Repurposed by the client

A valuation prepared for internal planning appears in a transaction. The intended-use clause is what makes that the client's problem rather than yours.

A calculation quoted as a conclusion

The two have different scopes and different reliability. If the letter does not distinguish them, the summary email will not either.

The date nobody noticed

Value as at a date twelve months before the report was read, in a market that moved. Say the effective date twice.

Other engagement letters

What it is Engagement letters Fiduciary accounting Fiduciary Legal services Legal

Questions about appraisal engagements

Can the report be shared with a lender or a buyer?

Only if they were named as intended users, or you consent in writing afterwards. Adding a user usually means reconsidering the scope, because a party relying on the report may need more than the original one did.

Can an appraisal fee be contingent on the value reached?

No. It is prohibited by valuation standards and it destroys the credibility of the work. The letter states that the fee is not contingent for exactly that reason.

What is the difference between a calculation and a conclusion of value?

A calculation applies agreed procedures to reach a calculated value and is narrower in scope; a conclusion of value reflects the full analysis the standards require. They are not interchangeable, and the report must say which it is.

Do we need to inspect the asset?

It depends on the standard, the purpose and the asset. What matters for the letter is that the scope says clearly whether you will, because a desktop valuation that reads like a full appraisal is the easiest kind of report to attack.

Sources

The primary sources this page is written against, last read against it on . Check them before relying on a detail; rules and thresholds change.

  1. CBV Institute CBV Institute updated Practice Standards (new PS 100, updated 110/120/130) effective for…
  2. Appraisal Institute of Canada CUSPAP 2026 edition effective April 1, 2026
  3. Government of Canada CRA Folio S4-F3-C1

What changed

  • Added an editable Word (.docx) copy of the letter beside the PDF.
  • Added the section on what Canadian law adds, written from primary sources, and reviewed the shared letter text for wording that only US law supports.

The letter is the easy half

Sending it, getting it back signed, and finding it again in two years is the half that eats the week. That is what the portal is for.

No card and no sales call. If you would rather tell us about your firm first, use the longer form.