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For disputes and investigations

A Canadian forensic accounting engagement letter for contested work

A forensic engagement is written for an audience that will attack it. The letter is the first document the other side will ask to see.

A forensic accounting engagement letter is the agreement that sets the terms on which a forensic accountant examines a financial question for a dispute or an investigation: who engages them, the question they are answering, what they will and will not do, and how any testimony is paid for. Everything about a forensic engagement is different from a compliance one. The work may be privileged or it may not, depending on who engages you. The output is a report that will be tested. You may be asked to give evidence, months after the fee was agreed, at an hourly rate nobody discussed.

Last reviewed against 3 primary sources.

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Forensic accounting engagement letter

The full letter in Word and PDF, written for Canada, covering privilege, independence, reporting and testimony.

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The letter below is written with all of that in front of it — including the awkward parts, like what happens to your fee if the client loses, and what you will and will not conclude.

What contested work demands of the letter

  1. 1

    Who engages you, and why it matters

    Engagement by counsel rather than by the party is a deliberate choice with consequences for privilege. Whoever it is, the letter must name them and say who may give instructions and who receives the report.

  2. 2

    The question you are answering

    Forensic scope is a question, not a service: quantify the loss between these dates on these assumptions. Write the question down, and write down the assumptions you were told to make.

  3. 3

    Independence, and what you will not do

    You are not an advocate. Say that your duty, where you give evidence, is to the court or tribunal and overrides your duty to the person paying you — because it does, and a letter that pretends otherwise damages the report.

  4. 4

    Testimony and contingency, priced separately

    Testimony, preparation and travel are their own rates. Contingent fees are improper for expert work in most jurisdictions; say the fee does not depend on the outcome.

The forensic accounting 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]

[Instructing party: counsel or client]
[Address]

Dear [Contact],

Who we are engaged by

We are engaged by [name] in connection with [matter and, where relevant, the proceedings]. Instructions to us will be given by [name], and our report will be delivered to [name]. We understand that this engagement [is / is not] made in contemplation of litigation and that the question of privilege is a matter for [instructing counsel].

The question we are asked to address

Our scope is to [state the question precisely: quantify, trace, analyse, or opine on a defined issue for a defined period], on the basis of the documents and assumptions identified in the appendix.

We are not engaged to audit any financial statements, to express assurance, to reach a conclusion on any legal question, or to investigate anything outside the question above.

Independence and our duty

We will act independently and objectively. Where we give evidence, our duty to the court or tribunal overrides any duty to the party instructing or paying us, and our opinion will not change because it is unhelpful.

Our fees are not contingent in any way on the outcome of the matter or on the conclusions we reach.

Information, and its limits

Our work will be based on the documents and information provided to us. Where information is incomplete or unavailable, we will say so in the report and describe the effect on our conclusions. We will not verify the authenticity of documents unless that is expressly part of the scope.

Reporting

We will deliver [an oral briefing followed by, where instructed, a written report]. Any written report will set out our instructions, the documents relied on, the assumptions made, our analysis and our conclusions, together with any limitations. Drafts are provided for factual comment only; our conclusions are ours.

Testimony

Court attendance, meetings with counsel, preparation and travel are charged at [rate] per hour, with [number] hours' cancellation notice required. Being called to give evidence is not included in any fee estimate for the analysis itself.

Fees

Our fees are charged at [rates] in Canadian dollars, with an estimate for the initial phase of [amount]. We require [amount] on account before work begins and will invoice [monthly], payable within [number] days. We may suspend work on unpaid invoices, including in the period before a hearing.

Confidentiality and the file

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

Agreement

Please sign and return a copy, together with the papers listed in the appendix.

[Name], [Firm name]

Agreed by [Instructing party]:

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.

What Canadian courts expect of a forensic retainer

Forensic work in Canada has its own practice guidance, CPA Canada's Standard Practices for Investigative and Forensic Accounting Engagements, and, once the work becomes evidence, the court's rules on experts. Both reach back into the engagement letter.

The court rules cited here are Ontario's and the Federal Court's. Other courts and tribunals have their own, so confirm the forum before the letter goes out.

Parameters agreed at acceptance

The standard practices expect the role, purpose, general scope and nature of any report to be settled at acceptance and documented, in an engagement letter where possible, with material changes in a supplementary letter. Circumstances that could question independence are disclosed to the client.

Your instructions will be read

An expert report under Ontario's Rule 53.03 must set out the instructions the expert was given, the factual assumptions behind the opinion and every document relied on. Draft the letter's instructions expecting to see them quoted back in the report.

A duty that outranks the client

Ontario's Rule 4.1.01 requires an expert's evidence to be fair, objective and non-partisan, and says that duty prevails over any obligation to the party who engaged the expert. CPA Canada's guidance adds that an expert witness never takes the role of an advocate.

Signing the court's form

An expert report in Ontario includes a signed acknowledgment of expert's duty in Form 53. In the Federal Court the expert signs Form 52.2, agreeing to be bound by its Code of Conduct for Expert Witnesses. Say you will sign whichever the forum requires.

What damages a forensic engagement

Scope written as a service

"Forensic accounting services" tells a cross-examiner nothing was defined. A written question and a written list of assumptions are the spine of a report that survives.

Assumptions absorbed silently

Every instruction to assume something must appear in the report. An assumption you were given and did not disclose looks, later, like an opinion you formed.

Testimony priced as an afterthought

Two days in a hearing eighteen months on, at rates agreed for desk work, is how a profitable engagement becomes a loss.

Other engagement letters

What it is Engagement letters Fiduciary accounting Fiduciary Audit Audit

Questions about forensic engagements

Should counsel engage us rather than the client?

Where privilege matters it is common, and it is a question for the lawyers rather than for us. Whichever it is, the letter should name the instructing party, who may instruct, and who receives the report.

Can a forensic fee ever be contingent?

For expert work it is generally improper, and it undermines the independence the report depends on. The letter says the fee does not depend on the outcome for exactly that reason.

What if our conclusions do not help the instructing party?

They do not change. Saying so in advance, in the engagement letter, is what makes it straightforward when it happens.

Does this template cover expert witness duties?

Only at the level of principle. Courts and tribunals impose their own requirements on experts, in their own words, and those govern. Take advice for the forum you are in.

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. Muskrat Falls Inquiry CPA Canada Standard Practices for IFA Engagements (reissued by CPA Canada; 2006 text)
  2. Government of Ontario Ontario Rules of Civil Procedure
  3. Justice Laws Website (Canada) Federal Courts Rules r.52.2

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.

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