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The Compilation Engagement Letter is a crucial document used in South African professional accounting practice when a client engages an accounting firm to compile financial information without providing assurance. This document, governed by South African law and professional standards, particularly ISRS 4410, is essential when businesses need assistance in preparing financial information but don't require an audit or review. It's commonly used by small to medium-sized enterprises, non-profit organizations, and other entities requiring professional accounting assistance. The letter details the nature of compilation services, clearly distinguishing them from audit or review engagements, and outlines the responsibilities of both parties, compliance requirements, and service deliverables. It serves as a formal agreement that protects both the accounting firm and the client by clearly establishing engagement terms and expectations.

1. Letterhead and Date: Professional firm's letterhead and current date

2. Recipient Details: Client's name, position, and business address

3. Engagement Subject Line: Clear identification of the compilation engagement purpose

4. Opening Salutation: Formal greeting to the client

5. Purpose and Scope: Detailed description of the compilation engagement's purpose and scope

6. Nature of Compilation Engagement: Explanation of what a compilation engagement involves and its limitations

7. Management's Responsibilities: Clear outline of the client's responsibilities regarding information provision and accuracy

8. Accountant's Responsibilities: Detailed description of the firm's professional responsibilities and duties

9. Deliverables: Specific outputs and reports to be provided

10. Timeline and Deadlines: Expected timeframes for the engagement

11. Fees and Payment Terms: Professional fees, payment schedule, and related terms

12. Professional Standards: Reference to applicable professional standards and compliance requirements

13. Confidentiality: Commitments regarding information security and confidentiality

14. Acceptance and Confirmation: Instructions for confirming acceptance of the engagement terms

15. Closing and Signatures: Professional closing, signature blocks for both parties