The engagement agreement – what should you check before signing?

The agreement is required by law and has to specify which tasks the firm will carry out and for what period. Read particularly the division of work, the deadlines both ways, what comes on top of the monthly price, who owns the system account, what format the data comes in when the engagement ends, and the notice period. There is no statutory notice period – it is in your agreement.

The agreement is not a formality

Section 5-2 of the Accountants Act requires the firm to create a written engagement agreement for every accounting engagement. It has to specify which tasks are to be carried out, and for what period. Good accounting practice sets further requirements for the content, including whether the accountant is to prepare periodic reports and how often. It also puts particular weight on the accountant's tasks being stated specifically where you do part of the work yourself. On top of that, it is good practice to agree clear deadlines – both for when you provide documentation and for when the accountant carries out and reports the work. This matters because there is no standard package that automatically comes with «having an accountant». Two agreements at the same monthly price can cover entirely different things.

1. What will the accountant actually do?

Start with the scope. It should be clear whether the accountant handles the continuing bookkeeping, bank reconciliation, VAT, invoicing, supplier payments, payroll, the a-melding, periodic reporting, the tax return and the year-end close. Just as important: what will you do? Where you invoice customers yourself and upload receipts, while the accountant books, reconciles and reports, that has to be stated. The more you share the work, the more precise the division has to be – see What do you do yourself, and what do you outsource?

2. The deadlines – including your own

A good engagement agreement is not only about public deadlines. It sets internal deadlines between you and the accountant. Where salary is paid on the 25th, the accountant has to know when timesheets, bonuses and absences are due. Where the accountant files the VAT return, when all the records have to be ready has to be agreed. It is good practice to agree clear internal deadlines for when you provide the material and when the accountant carries out and reports the work. Be sceptical of agreements that say nothing about what happens when documentation arrives late. It should say whether a delay can mean deferred work or extra cost.

3. What comes on top of the monthly price?

The monthly price is rarely the total. Settle in particular whether the year-end close, payroll, extra advice, putting things right, the system subscription, the bank integration, the year-end system and other administrative tasks are included or billed separately. The shareholder register statement is a good example: it is a separate annual obligation for limited companies and is not automatically part of a year-end close price – see The shareholder register statement With an hourly rate, you should be able to understand what you are being invoiced for. With a fixed price, it is particularly important that the price, the scope, the volume assumptions and what is invoiced on top are clear from the agreement – see Fixed price or hourly rate

4. Who owns the system account?

The accounting system is often a larger part of the total cost than people expect, and who owns the account matters more than the price. Establish who is the customer of the system supplier, and who pays for the subscription, the payroll module, the bank integration, e-invoicing and other add-ons. Then think about the day the relationship ends: can you keep the system account? Can the accounting data be exported? Do you get access to old records? Under GRFS, accounting data is transferred in SAF-T format unless something else has been agreed. If you want a different format for the handover, that should be agreed. A warning: the GDPR right to data portability covers personal data. It does not give the business a right to move an entire accounting system. That has to be agreed.

5. Authorisations are not the same as access

Where the accountant is to act on the business's behalf towards others – filing with the authorities, banking tasks – there has to be a written authorisation. GRFS distinguishes between technical access and the authority to act on the client's behalf. Giving a user access in the bank or in Altinn is therefore not necessarily the same as having given an authorisation. Where the accountant is to handle payments, settle who registers and who approves. For firms with payment engagements, GRFS says there should be a division of work so that the same person cannot both register and approve a payment. A common and safe model is that the accountant prepares the payments and the client approves them.

6. On a change, the new firm contacts the old one

If you are coming from another firm, there is a check before the engagement is established. Section 5-1(2) of the Accountants Act says that before a firm takes on an engagement, it has to ask the client's previous accountant whether there are circumstances indicating that a new accountant should not take it on. The previous accountant has to give this information without being prevented by their duty of confidentiality, and in writing if the new firm asks for it. Under good accounting practice the reply has to be given without undue delay. That does not give the previous accountant a veto. The purpose is for the new firm to learn about real problems with the engagement before taking it over. The whole process is in Switching accountant

7. Customer due diligence before the start is normal

Accounting firms have to understand who the client is, who controls the business and who acts on its behalf, before the relationship is established. For companies that means checking the company information, mapping the ownership and control structure and identifying the beneficial owners. A natural person owning or controlling more than 25% is normally a beneficial owner, but control can also follow from voting rights, the right to appoint directors or agreements. It is therefore entirely normal for a new firm to ask for more information about the ownership than you might have expected. It implies no suspicion of you.

8. The notice period is in the agreement, not the law

There is no general statutory notice period for accounting agreements. One, two or three months can all be agreed. Three months' written notice, running from the first day of the month, is the period in Regnskap Norge's standard terms – but those apply only where your agreement builds on them. So check three things: how long the period is, from what point it starts running, and what the accountant will do during it. That is exactly what later decides who does the final VAT return, the next payroll run or the year-end close.

9. What happens to the data when the agreement ends?

Under good accounting practice, accounting material and accounting data are to be handed over to you as soon as possible when the engagement ends. The material has to be made available so that the business can meet its retention and electronic access requirements. Unless something else has been agreed, the accounting data is transferred in SAF-T format. The current GRFS does not regulate the question of a right of retention. If you disagree about the fee, that should be dealt with separately from the handover. Settle the handover format and any costs before a conflict arises. How long you have to keep the material yourself is in Retention of accounting records

10. Data protection belongs in the contract documents

An accounting firm processes large amounts of personal data about employees, customers and suppliers. Where the firm processes personal data on the business's behalf as a processor, the relationship has to be governed in line with article 28 of the GDPR – either in the engagement agreement or in a separate data processing agreement. Check that the data protection documentation is actually part of the contract documents – not merely mentioned in a general privacy notice on the website.

The checklist before you sign

The firm is approved by Finanstilsynet · the responsible state-authorised accountant is identified · it is clear which tasks the accountant does · it is clear which you do · delivery and reporting deadlines are specified · the fixed price's scope and volume assumptions are understandable · the hourly rate and the rules for extra work are stated · it is clear whether payroll and the year-end close are included · system, bank and licence costs are settled · authorisations and payment routines are settled · the notice period and its terms are understandable · how data and documentation are handed over at the end is settled · data protection and any processor agreement are handled · the process towards the previous accountant is settled. You can check the approval yourself in Finanstilsynet's register of undertakings. A long agreement is not necessarily a good one. What matters most is that you understand it.

This is general guidance, not advice on your specific case. Deadlines, rates and amounts change – always check the current rules, or get in touch with us.

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