This letter is to confirm our understanding of the terms and objectives of our engagement and the nature and limitations of the services we will provide for you for period ending We will present you with a new engagement letter by that date, but if we do not, this engagement will continue until one of us terminates the engagement. Please read this letter carefully as it is important to both you and Shamballa Centre that you understand and accept the terms under which we have agreed to perform our services, as well as management’s responsibilities under this agreement. If you are confused at all by this letter or believe we have misunderstood what you need, please call to discuss this letter before you sign it.
We will perform the following services:
About Shamballa Centre LLC Bookkeeping Services
It is management’s responsibility to assure cash is managed and all bills are paid in full. We are only responsible for recording the information you have provided to us and creating payments/checks you have requested.
We will record all missing deposits and expenses in QuickBooks Online. You agree to provide us the following documents on a weekly basis: cash income receipts and bank deposit slips with check copies, purchase orders, invoices, and miscellaneous cash disbursement receipts; and on a monthly basis: bank statements, credit card statements, square statements, and sales reports. You will provide us online access to bank statements, credit card statements, square statements, and sales reports.
We will record cash receipts from your cash receipts and deposit slips. We will not handle any cash or checks received nor make deposits.
We will record all bills that you or your representative has authorized. The payment will be generated either by paper check or electronic payment (check free). We will not be responsible for the signing of checks. If you have given us or had emailed to us a bill, it is considered authorized to be paid by the due date of the bill, unless otherwise indicated on the face of the bill.
We will classify receipts and disbursements based upon information you have given to us related to the nature of the item. You agree to review the reports QuickBooks Online provides you each month and to tell us of any changes necessary in the classification or distribution of the transactions. Unless you tell us of a change, we will assume that all transactions have been properly coded and have been posted to the correct accounts. The information in QuickBooks Online will then be used as appropriate in the preparation of the compiled financial statements and income tax returns as outlined below.
About Our Standard Bank Reconciliation Services
Each month we will reconcile your checking account with the bank statement for proper account balance and to identify any errors. We will only review cancelled checks that are not already in the system. We will make correcting entries directly into QuickBooks and identify the specific source of any material adjustment. We will tell you of these material adjustments.
Our ‘standard bank reconciliation services’ are performed solely to reconcile the amount of Cash in Bank on your books with the amount of Cash in Bank shown on the bank statement. This service is limited in scope and is neither designed nor intended to deter or discover fraud, embezzlements or any other irregularities.
When performing the ‘standard bank reconciliation services’ we DO NOT:
• Look at individual checks,
• Examine signatures, payees or any other information on any individual check,
• Examine the signature cards on file with the bank or determine if the correct authorized individuals have signed the check,
• Determine whether payee information matches what is shown in your books,
• Perform any procedures to determine whether the checks are for appropriate expenses, or
• Supervise, audit or review accounting work.
Because we do not perform any of the steps described above, we are able to perform our ‘standard bank reconciliation services’ quickly and at low cost.
Preparation of Financial Statements
Shamballa Centre LLC does not prepare, compile, review, assess, or audit Financial Statements. QuickBooks, from information you provide, generates balance sheets and related statements of profit and loss and cash flows, among other reports. Upon request, we can assist with in accordance with the “preparation standards” as set forth in the Statements on Standards for Accounting and Review Services (SSARS) promulgated by the Accounting and Review Services Committee of the American Institute of Certified Public Accountants (AICPA) and applicable ethical principles established by the AICPA’s Code of Professional Conduct. Unless you have requested them, reports will not include a statement of cash flows and related notes to the financial statements as required by accounting principles generally accepted in the United States of America.
The objective of this service is to provide you with your financial statements in accordance with the financial reporting framework you select, based on information provided by you. It is our understanding that you have selected accounting principles generally accepted in the United States of America (U.S. GAAP) as your financial reporting framework and, as such, that is the framework we will use for this service. We will not audit, review, or compile these financial statements. By your signature below you acknowledge and agree that no report will accompany the financial statements and each page of the financial statements will clearly indicate that no assurance is provided.
Should management require a different level of service for the aforementioned financial statements in addition to, or in place of, the limited preparation services described in this letter (i.e., compilation, review, or audit), we will be happy to refer you to a CPA Firm providing such services.
As preparation services differ significantly from a compilation, review, or an audit of financial statements, the information provided by management will not be verified, corroborated, compiled, reviewed, or audited. Additionally, this service does not contemplate obtaining an understanding of the entity’s internal control; assessing fraud risk; testing accounting records by obtaining sufficient appropriate audit evidence through inspection, observation, confirmation, or the examination of source documents (e.g., cancelled checks or bank images); or performing other procedures ordinarily occurring in an audit or review of financial statements. Therefore, this service does not provide a basis for expressing an opinion or a conclusion; nor will we express any level of assurance on the financial statements being prepared. Accordingly, no form of assurance will be given on the financial statements. If, for any reason, we are unable to complete the preparation of your financial statements, we will not issue such statements as a result of this service.
Intuit Online Payroll (IOP) Services
Using IOP, Shamballa Centre LLC prepares, on a quarterly basis, the federal and state payroll tax return for the state(s) of Washington. If there is payroll tax due with the quarterly report, we will notify you when the payment will come out of your designated account or how to make the payment. You are responsible for assuring the federal and state payroll tax deposits have been made timely and in full.
On an annual basis, we will prepare the year-end payroll tax returns, including federal and state unemployment tax returns, Forms W-2, W-3, 1099, and 1096, as required.
Upon request, we will support you with issue resolution with Intuit Online Payroll or QuickBooks Online Payroll, and payroll tax agencies. Also upon request, we will setup your payroll system, input employee and employer information, and create paychecks for you. However, depending on your service level, these services may require additional hourly charges in addition to your usually payroll service fees.
Tax Return Preparation Services
We will prepare federal and state income tax returns for the state(s) of Washington, if outlined in the services provided above, from information you furnish us for you.
In December 2017, the President signed into law the Tax Cuts and Jobs Act (“Tax Act” or “Act”) which introduces the most significant changes to the U.S. tax system since 1986. With a few exceptions, the provisions are generally effective starting in the 2018 tax year. As such, your federal and state income tax returns for the 2018 and subsequent tax years may look substantially different as compared to prior years. If you have any questions regarding the application of the Tax Act, please ask us for advice in that regard.
You are confirming that you will furnish us with all the information required for preparing the returns. This includes, but is not limited to, providing us with the information necessary to identify (1) all states and foreign countries in which you “do business” or derive income (directly or indirectly), and (2) the extent of business operations in each relevant state and/or country. We will not audit or verify the data you submit, although we may ask you to clarify it or furnish us with additional data. You should retain all the documents, books, and records that form the basis of your income and deductions. The documents may be necessary to prove the accuracy and completeness of the returns to a taxing authority. If you have any questions as to the type of records required, please ask us for advice in that regard.
We will use our professional judgment in preparing your returns. Given the magnitude of the changes the Tax Act contains, as well as some new concepts introduced in the law, additional stated guidance from the Internal Revenue Service, and possibly from Congress in the form of technical corrections, may be forthcoming. We will use our professional judgment and expertise to assist you given the Tax Act guidance as currently promulgated. Subsequent developments issued by the applicable tax authorities may affect the information we have previously provided, and these effects may be material. Whenever we are aware that possibly applicable tax law is unclear or that there are conflicting interpretations of the law by authorities (e.g., tax agencies and courts), we will explain the possible positions that may be taken on your return as long as they are consistent with the codes and regulations and interpretations that have been promulgated.
If a taxing authority should later contest the position taken, there may be an assessment of additional tax plus interest and penalties. We assume no liability for any such additional penalties or assessments. In the event, however, that you ask us to take a tax position that in our professional judgment will not meet the applicable laws and standards as promulgated, we reserve the right to stop work and shall not be liable for any damages that occur as a result of ceasing to render services.
By your signature below, you understand and agree that management is responsible for the accuracy and completeness of the records, documents, explanations, and other information provided to us for purposes of the tax preparation services we provide as part of this engagement. You have the final responsibility for the income tax returns and, therefore, you should review them carefully before you sign them. You agree that our firm is not responsible for a taxing authority’s disallowance of deductions or inadequately supported documentation, nor for resulting taxes, penalties, and interest.
Tax and Business Planning
On a periodic basis, as needed, we will meet with you to discuss your accounting records and the management implications of your financial statements. These meetings are important to your financial well-being and should be held regularly.
We will be available to meet with you at your request to provide general business advice and tax planning. In our relationship, we are often advisors, not advocates, with regard to investment advice. We will advise you on the implications, if any, of specific matters you bring to our attention. We will advise you of the implications of an investment in light of today’s tax laws and our opinion, if any, of the economy. We may give you our opinion of the merits of an investment, but our opinion should not be relied on for making the ultimate investment decision.
It is our protocol to put all advice on which a client intends to rely upon in writing. We believe this is necessary to avoid any confusion and make clear the specific nature of our advice. As such, you should not rely on any unwritten advice from our firm.
Federal law has extended the attorney-client privilege to some, but not all, communications between a client and the client’s CPA. The privilege applies only to non-criminal tax matters that are before the IRS or brought by or against the U.S. Government in a federal court. The communications must be made in connection with tax advice. Communications solely concerning the preparation of a tax return will not be privileged.
In addition, the confidentiality privilege can be inadvertently waived if the contents of any privileged communication are discussed with a third party, such as a lending institution, a friend, or a business associate. We recommend that you contact us before releasing any privileged information to a third party. As a corporation, you need to be especially careful about privileged communications. If a communication is made in the presence of a corporate employee who is not authorized to act or speak for the corporation in relation to the communication’s subject matter, then the communication will be deemed to be made in the presence of a third party and any privilege will be waived.
If we are asked to disclose any privileged communication, unless we are required to disclose the communication by law, we will not provide such disclosure until you have had an opportunity to argue that the communication is privileged. You agree to pay any and all reasonable expenses that we incur, including legal fees, that are a result of attempts to protect any communication as privileged.
Remote Access to Financial Records
You have agreed to provide Shamballa Centre access to the QuickBooks Online, Intuit Online Payroll, Google Drive, Dropbox, Square, banking information and other cloud-based information via remote access by our firm into your system from the Internet in order to perform the services contained in this letter.
Our firm’s remote access to your remotely accessed information will be on an as-needed basis in order to perform the procedures identified above and will be for your convenience. However, by your signature below, you understand that the accounting records are solely the responsibility of you. Our work in connection with this engagement is not intended to result in the submission or issuance of financial statements by Shamballa Centre as defined by Statements on Standards for Accounting and Review Services (SSARS) issued by the American Institute of Certified Public Accountants (AICPA). As such, this engagement does not contemplate the audit, review, compilation or preparation of financial statements.
The above work will be done on a timely basis to ensure that the company meets its timetable for the internal distribution of financial statements. The work performed above will be done on an as-needed hourly basis, which limits our involvement and knowledge of the daily operations of the company. Because of this, there is a risk that material errors, irregularities, or noncompliance with laws and regulations, including fraud or defalcation, may exist and may not be detected by us. By signing below you acknowledges this fact and agrees to indemnify us should any of the above situations occur.
You also understand and agree, by your signature below, that you maintain sole responsibility for the appropriateness of your company’s security measures related to its remote access users.
Responsibilities of Management
Management is responsible for providing us with access to all information of which management is aware that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, and other matters, as well as additional information we may request for this engagement. Management will also provide us with unrestricted access to persons within the entity with whom we determine it necessary to communicate. By your signature below, you understand and agree that management is responsible for the accuracy and completeness of the records, documents, explanations, and other information provided to us, including management’s significant judgments impacting the preparation and fair presentation of the financial statements.
As outlined in this letter, we may prepare or generate your financial statements and may advise you about appropriate accounting principles and their application, but the final responsibility for the preparation of the financial statements in accordance with the financial reporting framework you selected, U.S. GAAP, remains with you. Also, as part of our engagement, we may create standard, adjusting, or correcting journal entries to your financial statements. Management, however, has final responsibility for reviewing and understanding the nature and impact of the proposed entries to the financial statements. Management understands that the financial statements prepared in accordance with the terms of this letter will not be accompanied by a report; and agrees that the financial statements will clearly indicate that no assurance is provided on them.
In addition, you are responsible for establishing and maintaining internal controls, including monitoring ongoing activities. This includes designing, implementing, and maintaining internal controls relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error; as well as identifying and ensuring that the organization complies with the laws and regulations applicable to its activities. We will have no responsibility to identify and communicate deficiencies in your internal controls as part of this engagement.
Our engagement cannot be relied upon to disclose errors, fraudulent financial reporting, misappropriation of assets, or noncompliance with laws and regulations that may have occurred. Your signature below further acknowledges that you understand and agree that you are responsible for preventing and detecting fraud. Management is also responsible for the design, implementation, and administration of applicable policies that may be required under the Affordable Care Act. As Shamballa Centre is not rendering any legal services as part of our engagement, we will not be responsible for advising you with respect to the legal or regulatory aspects of your company’s compliance with the Affordable Care Act.
During the course of this engagement we may have access to proprietary information of the company, including, without limitations, oral and written information and material concerning or pertaining to the company’s trade secrets, business methods, plans, and/or projects. We acknowledge that such information, regardless of its form, is confidential and proprietary to the company, and that we shall not use, copy, or disclose the information in whole or in part in any manner or to any person or entity without the express prior written consent of a duly authorized officer of the company.
In accordance with the terms and conditions of this agreement, you shall be responsible for the accuracy and completeness of all data, information and representations provided to us for purposes of this engagement. Because of the importance of oral and written management representations to the effective performance of our services, you release and indemnifies our firm and its personnel from any and all claims, liabilities, costs and expenses attributable to any misrepresentation by management and its representatives.
Payment for regular services are generally due prior to starting work.
For hourly services, interim billings may be submitted as work progresses and expenses are incurred. The total fees and costs for your accounting services may exceed any estimates given to you. It is not possible to know in advance what the total fees and costs will be, because much of the work to be performed may be contingent on the activities of others and circumstances over which we have no control. From time to time, you may ask us to estimate what a specific portion, or the entirety, of the services will cost. To aid you in planning, we will attempt to assist you by providing estimates. You understand that all such estimates are approximations based on our experience as accountants, and they are not and should not be taken as promises or guarantees.
Invoices for our services will be sent on a monthly basis. Current billing rates for our staff and related services are on our website. Billings become delinquent when not paid upon receipt. If billings are past due in excess of 30 days, we reserve the right to discontinue services until your account is brought current or withdraw from this engagement. you acknowledge and agrees that we are not required to continue work in the event of your failure to pay on a timely basis for services rendered as required by this engagement letter. In the event any statement or invoice rendered is not paid within 30 days of the date of the invoice, a late charge shall be accrued on the unpaid amount at the rate of 1% per month from that date until paid. You further acknowledges and agrees that in the event we stop work or withdraw from this engagement as a result of your failure to pay on a timely basis for services rendered as required by this engagement letter, we shall not be liable for any damages that occur as a result of our ceasing to render services.
In connection with this engagement, we may communicate with you or others via email transmission. We take reasonable measures to secure your confidential information in our email transmissions, including password protecting confidential documents. However, as email can be intercepted and read, disclosed, or otherwise used or communicated by an unintended third party, or may not be delivered to each of the parties to whom it is directed and only to such parties, we cannot guarantee or warrant that email from us will be properly delivered and read only by the addressee. Therefore, we specifically disclaim and waive any liability or responsibility whatsoever for interception or unintentional disclosure or communication of email transmissions, or for the unauthorized use or failed delivery of email transmitted by us in connection with the performance of this engagement. In that regard, you agree that we shall have no liability for any loss or damage to any person or entity resulting from the use of email transmissions, including any consequential, incidental, direct, indirect, or special damages, such as loss of sales or anticipated profits, or disclosure or communication of confidential or proprietary information.
It is our policy to keep records related to this engagement for seven years. However, Shamballa Centre does not keep any original client records, so we will return those to you at the completion of the services rendered under this engagement. When records are returned to you, it is your responsibility to retain and protect your records for possible future use, including potential examination by government or regulatory agencies.
By your signature below, you acknowledge and agree that upon the expiration of the seven-year period, Shamballa Centre shall be free to destroy our records related to this engagement.
If any dispute arises among the parties hereto, the parties agree to first try in good faith to settle the dispute by mediation administered by Olympic Legal Services, Anacortes, Washington under its applicable rules for resolving professional accounting and related services disputes before resorting to litigation. The costs of any mediation proceeding shall be shared equally by all parties.
Client and accountant both agree that any dispute over fees charged by the accountant to the client will be submitted for resolution by arbitration in accordance with the applicable rules for resolving professional accounting and related services disputes of the American Arbitration Association, except that under all circumstances the arbitrator must follow the laws of Washington. Such arbitration shall be binding and final. IN AGREEING TO ARBITRATION, WE BOTH ACKNOWLEDGE THAT, IN THE EVENT OF A DISPUTE OVER FEES CHARGED BY THE ACCOUNTANT, EACH OF US IS GIVING UP THE RIGHT TO HAVE THE DISPUTE DECIDED IN A COURT OF LAW BEFORE A JUDGE OR JURY AND INSTEAD WE ARE ACCEPTING THE USE OF ARBITRATION FOR RESOLUTION. The prevailing party shall be entitled to an award of reasonable attorneys’ fees and costs incurred in connection with the arbitration of the dispute in an amount to be determined by the arbitrator.
We appreciate your confidence in our firm by retaining us as your certified public accountants and shall be pleased to discuss this letter with you at any time.