ACIE - EXAMPLE LETTER OF ENGAGEMENT

LETTER STYLE	R3 (January 2018)

Form of Accounts:	Receipts & Payments

Jurisdiction:	Northern Ireland

Legal Form:	Non-Company

Accounting Period:	Commencing on or after 01 January 2016

DISCLAIMER

This example Letter of Engagement is:

provided for use by members of ACIE only. It must not be passed, or made available, to anyone else.

supplied “as is” with no warranty of any kind. Whilst every care has been taken to ensure its accuracy and completeness, neither ACIE or any person connected with its preparation can take any responsibility for its suitability or for the way in which it may be used.

Users are responsible for amending it as necessary to ensure that it meets:

their own requirements for the proposed engagement;

the requirements of any other professional body(ies) of which the user is a member; and

all applicable legislation.

THIS LETTER SHOULD ONLY BE USED WHERE ALL OF THIS SECTION APPLIES:

The charity:

is an unincorporated association or a charitable trust;

is not a charitable company and registered with Companies House;

is established in Northern Ireland and registered with the Charity Commission for Northern Ireland;

is not established or registered in any other jurisdiction;

is not or an “investment fund” or a “special case” charity as defined in regulation 2 of the Charities (Accounts and Reports) Regulations (Northern Ireland) 2015; and

does not have any subsidiary undertakings;

is eligible to prepare Receipts & Payments Accounts and the trustees have elected to do so; and

is eligible for Independent Examination.

The charity’s accounting period does not start before 01 January 2016.

The charity’s accounts have been prepared on the receipts & payments basis.

The requirements as to the form and content of the charity's statement of accounts are contained solely in:

section 64 of the Charities Act 2008;

regulation 8 of the Charities (Accounts and Reports) Regulations (Northern Ireland) 2015.

CUSTOMISING THE LETTER

This letter cannot be used until it has been properly tailored for the proposed engagement.

Blue text indicates information that needs to be provided, or clauses that need to be amended or deleted.

Once all the necessary changes have been made, all the blue text should be deleted.

When clauses or sub-clauses are deleted, all the following clauses and/or sub-clauses will be renumbered automatically.

[Address of Examiner]

[Date]
The Trustees

[Full name of charity]

[Address of charity]

Dear Trustees

TERMS OF APPOINTMENT AS INDEPENDENT EXAMINER

This engagement letter, which replaces any previous engagement letter, sets out the basis on which I am to act as independent examiner of, and prepare a report on, the statement of accounts of [full name of charity and charity number] (“the charity”) for the year ended [financial year end], and for future years until further notice.

INTERPRETATION

In this letter, the following terms shall have the meanings ascribed to them:

“CCNI” means the Charity Commission for Northern Ireland

“the Act” means the Charities Act (Northern Ireland) 2008 as amended by the Charities Act (Northern Ireland) 2013

“the Directions” means the general directions setting out the duties of an independent examiner issued by CCNI under section 65(9)(b) of the Act:

“the Regulations” means the Charities (Accounts and Reports) Regulations (Northern Ireland) 2015

BASIS OF ENGAGEMENT

My examination will be carried out in accordance with:

section 65 of the Act;

regulation 25 of the Regulations;

the Directions; and

the standards that I consider necessary to reach the conclusions required for my report.

My examination will be conducted on the basis that the charity:

[from the next two clauses, delete the one that does not apply]

is an unincorporated association;

is a charitable trust;

is established in Northern Ireland and registered with CCNI;

is not established or registered in any other jurisdiction;

is not or an “investment fund” or a “special case” charity as defined in regulation 2 of the Charities (Accounts and Reports) Regulations (Northern Ireland) 2015;

has no subsidiary undertakings; and

is preparing its statement of account on the receipts and payments basis.

RESPONSIBILITIES - TRUSTEES

As the charity's trustees, you are responsible for:

keeping proper accounting records in accordance with section 63 of the Act.

preparing a statement of accounts which:

accords with those accounting records and comprises:

a Statement of Receipts & Payments;

a Statement of Assets and Liabilities; and

Notes to the Accounts (if required).

complies with:

section 64(1) of the Act; and

regulation 8 of the Regulations.

preparing an annual report which:

complies with section 68(1) of the Act; and

complies with regulation 33 of the Regulations.

determining whether, in respect of the year, you are permitted:

under section 64(3) of the Act, to prepare the statement of account on a receipts and payments basis rather than on an accruals basis; and

under section 65(3) of the Act, to have the statement of account examined by an independent examiner rather than audited by a registered auditor.

providing me with information and explanations required for my examination, in accordance with Regulation 26 of the Regulations.

approving the annual report and statement of account at a validly convened meeting of the trustees and recording that approval in the minutes of the meeting.

RESPONSIBILITIES - INDEPENDENT EXAMINER

I shall plan my work each year on the basis that an independent examiner's report on the statement of accounts is required, unless you inform me in writing to the contrary.

As independent examiner, I have a duty under regulation 25 of the Regulations and the Directions:

to state in my report whether or not any matter has come to my attention in connection with the examination:

which gives me reasonable cause to believe that in any material respect:

the charity has not kept proper accounting records in accordance with the requirements in clause 3.1.1 above;

the statement of accounts does not accord with the accounting records;

the statement of accounts has not been prepared in accordance with the requirements in clause 3.1.2 above; or

to which, in my opinion, attention should be drawn in order to enable a proper understanding of the statement of accounts to be reached.

to state in my report:

if there has been any material expenditure or action which appears not to be in accordance with the purposes of the charity;

if any information or explanation to which I am entitled has not been afforded to me; or

if any information contained in the statement of accounts is inconsistent with the annual report in any material respect.

Should my work lead me to conclude that the charity is not entitled:

to prepare its statement of accounts on the receipts and payments basis, I will not issue any report and will notify you in writing of the reasons. In these circumstances, if appropriate, I will discuss with you the need to prepare statement of accounts on the accruals basis.

to exemption from an audit of the statement of accounts, I will not issue any report and will notify you in writing of the reasons. In these circumstances, if appropriate, I will discuss with you the need to appoint an auditor.

INDEPENDENT EXAMINER'S WORK - SCOPE

An independent examination of a charity's statement of accounts is a less onerous form of scrutiny than an audit carried out in accordance with Auditing Standards. My work will include:

a review of the charity's accounting records and a comparison of the statement of accounts with those records;

an analytical review of the statement of accounts to identify any unusual items, unexpected fluctuations or inconsistencies with other financial information;

an assessment of any significant estimates or judgements that have been made in preparing the statement of accounts; and

a review of events subsequent to the financial year-end.

If I have reason to believe that the statement of accounts may be materially misstated, I will seek explanations from you and may carry out verification procedures.

My work cannot be relied on to identify the occasional omission, insignificant error, instances of neglect, fraud, breaches of trust or statute that may have taken place and which it is your responsibility to guard against.

Should I become aware, for any reason, that the statement of accounts may be misleading and I cannot agree appropriate amendments, and I conclude that the matter cannot be dealt with adequately in my report, I will not issue any report and will withdraw from the engagement, and will notify you in writing of the reasons.

As part of my normal procedures, I may request you to provide written confirmation of any information or explanations given to me orally during the course of my work.

INDEPENDENT EXAMINER'S WORK – CONDUCT AND CONFIDENTIALITY

I undertake that:

my work will be conducted with reasonable care and skill; and

I will not disclose any confidential information concerning the charity's activities, trustees, officers or employees to any third party without your prior written consent, unless I am legally required to do so.

The working papers prepared during my work are my property, constitute confidential information and shall be retained by me.

Nothing in this letter shall preclude me from taking such steps as are necessary in order to comply with the regulations, standards and guidance statements on ethics and professional practices of any professional bodies of which I am a member.

Reporting to the Regulator:

Under section 67 of the Act, I have a legal duty to inform CCNI if I identify a matter relating to the activities or affairs of the charity, or of any connected institution or body, which I have reasonable cause to believe is likely to be of material significance to CCNI’s regulatory functions under sections 22 or 33 of the Act.

My duty to report to CCNI does not require me to disclose to you the fact that I have made a report.

Money Laundering:

[If the examiner is not subject to the money laundering regulations (e.g. is not charging a fee), delete this section]

Before undertaking any work, I am required by the Proceeds of Crime Act 2002 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“the legislation”) to:

carry out identification procedures for all new assignments accepted by me; and

maintain adequate records of identification evidence obtained.

I have a statutory duty under the legislation to report to the National Crime Agency if I know, or have reasonable grounds to suspect, that another person is involved in money laundering. Money laundering is defined by section 340(11) of the Proceeds of Crime Act 2002 and has a wide definition. It can include, but is not limited to:

tax evasion;

failure to keep proper books and records; and

fraudulent operation of the Gift Aid scheme.

My statutory duty to report to the National Crime Agency includes a legal obligation to do so without your consent and without disclosing to you the fact that I have made a report.

[If the examiner is not a full member of ACIE, or a member of another relevant professional body, delete the last sentence of this clause. Otherwise, insert the name of the professional body]

My objective is to provide the charity with a high quality service to meet the charity's needs. If at any time you would like to discuss with me how my service to you could be improved or you are in any way dissatisfied with the service you are receiving, please let me know. I undertake to look into any matter carefully and promptly and to do all I can to resolve the position to your satisfaction. In the unlikely event that by this process I am unable to meet your concerns you may, of course, take up the matter with [full name of professional body].

PROFESSIONAL INDEMNITY INSURANCE

[Examiners must follow the rules of any professional body of which they are a member regarding the holding and disclosure of PII cover.]

This section should be deleted if:

The examiner does not hold PII cover; or

PII cover is disclosed in an alternative document provided to clients (e.g. a “terms of business” letter).

Otherwise:

Examiners who are members of ACIE’s PII scheme should delete Clause 1 below.

Examiners holding any other PII cover (not disclosed elsewhere) should complete Clause 1 below as required and delete Clause 2.

My professional indemnity insurer is [name of insurer] of [address of insurer]. The territorial cover is [details of cover].

I hold professional indemnity insurance under the Association of Charity Independent Examiners’ Group scheme arranged through Keegan & Pennykid (Insurance Brokers) Ltd, 50 Queen Street, Edinburgh, EH2 3NS for its members. The insurer is Royal & Sun Alliance plc, St Marks Court, Chart Way, Horsham, RH12 1XL. The territorial coverage is worldwide excluding professional business carried out from an office in the United States of America or Canada and excludes any action for a claim brought in any court in the United States or Canada.

ADDITIONAL SERVICES

[If the examiner is not providing any other services in addition to carrying out the independent examination, the whole of this section should be deleted]

Preparation of statement of accounts:

[If the examiner is not preparing the accounts, this clause should be deleted]

I will draft the charity’s statement of accounts, based on the information that you provide, to assist you to comply with your duties in clauses 3.1.2 and 3.1.3.

Preparation of the charity’s statement of accounts is solely your responsibility. You should therefore conduct your own checks on the draft before deciding whether to approve it or to request amendments.

My role in assisting you to prepare the statement of accounts is entirely separate from my role as independent examiner.

Filing of accounts

[If the examiner is not filing the accounts, this clause should be deleted]

In this clause, “accounts” means a single document comprising:

a trustees annual report prepared in accordance with clause 3.1.3, which has been approved by the trustees;

a statement of account prepared in accordance with clause 3.1.2, which has been approved by the trustees; and

my independent examiner’s report.

In order to assist you with your statutory duties in respect of CCNI, I will:

complete your annual monitoring return; and

submit a copy of your accounts.

You are responsible for providing me with:

the information necessary to complete your annual monitoring return; and

access codes to CCNI’s online systems.

I will not be responsible for any failure to meet filing deadlines, or penalties that may arise from late filing, if I am not provided with all the necessary information, documents and access codes in sufficient time.

Other services:

[If the examiner is providing any other services (not separately agreed), details should be inserted here, otherwise this clause should be deleted]

FEES

[Delete the clauses that do not apply and amend the remaining clauses as required]

I do not propose to charge any fee for carrying out the examination or accounts preparation (if applicable).

I do not propose to seek reimbursement of any of my expenses.

My fee for carrying out the examination, including accounts preparation (if applicable), will be [amount or basis of fee structure].

My fee, which is payable to [name] and due [payment terms], is based on the assumption that the accounting records are in good order.

For future years, I will notify you of any change in my fee prior to undertaking any work.

GOVERNING LAW

This letter of engagement shall be governed by, and construed in accordance with, the laws of Northern Ireland.

AGREEMENT OF TERMS

Once it has been agreed, this engagement letter shall remain effective until:

there is a change in charity legislation;

there is change to the basis on which the examination is to be conducted;

it is replaced by mutual agreement; or

I cease to hold the position of independent examiner.

I shall be grateful if you will kindly confirm your agreement to the terms of this letter by signing both copies; thereafter returning one copy to me, and retaining the other copy for your files. Alternatively, if you have any queries, or if the terms of this letter are not in accordance with your understanding of the terms of my appointment, please let me know.

Yours sincerely

[Name of independent examiner]

[Professional qualifications of independent examiner]

I confirm that the trustees of [full name of charity] agree the terms contained in this engagement letter.

Signature:	________________________________

Name:	________________________________

Position:	Trustee

Date:	________________________________

ACIE - EXAMPLE LETTER OF ENGAGEMENT

2017-12-19