[Date]

[Client Name]

[Client Address]

Re: Engagement to Audit Financial Statements for [Client Name]

Dear [Client]:

We are pleased to confirm the terms and objectives of our engagement with [Client] for the [year/fiscal year/period] ending [Date], and to clarify the extent and limitations of the services we will provide.

[To perform our initial engagement, we must review the working papers of your former auditors. You need to authorize [Name of Previous Auditors] to make available to us the working papers they prepared in the audit of your financial statements for the year ended [date, year]]

We will audit the balance sheet of [Client] as of [period of year-end] and the related statements of revenues, expenses, and changes in fund balance and cash flows for the [period, year] then ended.

Our audit will be made in accordance with U.S. generally accepted auditing standards and will include tests of the accounting records of [Client] and other procedures we consider necessary to enable us to express an unqualified opinion that the financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. If our opinion is other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit, we will not issue a report as a result of this engagement.

Our procedures will include tests of documentary evidence that support the transactions recorded in the accounts and direct confirmation of cash, investments, and certain other assets and liabilities by correspondence with creditors and financial institutions. These procedures may, for example, include tests of the physical existence of inventories, and direct confirmation of receivables. At the conclusion of our audit, we will request certain written representations from you about the financial statements and related matters.

We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to that inquiry. At the conclusion of our audit, we will also request certain written representations from you about the financial statements and related matters.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. Our audit is designed to provide reasonable, rather than absolute, assurance of detecting misstatements that, in our judgment, could have a material effect on the financial statements taken as a whole. Consequently, our audit will not necessarily detect misstatements less than this materiality level that might exist due to error, fraudulent financial reporting, or misappropriation of assets.

Our audit is not specifically designed and cannot be relied on to disclose reportable conditions, that is, significant deficiencies in the design or operation of the internal control. However, during the audit, if we become aware of such reportable conditions or ways that we believe management practices can be improved, we will communicate them to you in a separate letter. By your signature below, you acknowledge that you are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud affecting the company that involves management, employees who have significant roles in internal control, and others where the fraud could have a material effect on the financial statements. You are also responsible for informing us of your knowledge of any allegations of fraud or suspected fraud affecting the company received in communications from employees, former employees, regulators, or others. You agree that you will confirm your understanding of your responsibilities as defined in this letter to us in your management representation letter. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors.

We understand that you will provide us with the basic information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, but the responsibility for the financial statements remains with you.You acknowledge that management is responsible for adjusting the financial statements to correct material misstatements and for confirming to us in the management representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Other management responsibilities include maintaining adequate records and related internal control policies and procedures, selecting and applying accounting principles, and safeguarding assets.

Our fees for these services will be at our standard hourly rates as they relate to the individuals performing the services, plus out-of-pocket expenses [or other appropriate description of fee arrangement].

In accordance with our firm policies, work may be suspended if your account becomes 90 days or more overdue, and will not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been concluded upon our providing you written notification of termination, even if we have not completed our work. You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket expenditures through the date of termination. If we stop work based on your account becoming delinquent, we will not be responsible for any additional expense or damage caused by the work stoppage.

In the event we are requested by the Compan[y/ies], or are required by government regulation, subpoena, or other legal process, to produce our documents or our personnel as witnesses with respect to our engagements for the Compan[y/ies], the Compan[y/ies] will, so long as we are not a party to the proceeding in which the information is sought, reimburse us for our professional time and expenses as well as the fees and expenses of our counsel, incurred in responding to such requests.

We will retain copies of our audit reports, the related financial statements and workpapers we create during this engagement for a period of [number consistent with document retention policy] years [from the date we deliver to you the reviewed financial statements and our review report, or other provision consistent with the document retention policy]. If you terminate your relationship with our firm, we will retain the review reports, compiled financial statements and associated workpapers for a period of [number consistent with document retention policy] years from the date of termination.

This engagement, and any engagement to audit financial statements for subsequent periods, ends upon delivery of the financial statements. Any related or follow-up services will be confirmed in a separate engagement letter. The terms and conditions of that new engagement will be governed by a new, specific engagement letter for that service.

While we do not expect there to be any problems whatsoever with our relationship, misunderstandings can occur. We believe that most disagreements can be resolved to mutual satisfaction in a friendly, non-threatening environment. Accordingly, in the event of any dispute arising out of, or relating to, this engagement, the parties will first attempt in good faith to settle the dispute through non-binding mediation administered by the American Arbitration Association under its mediation rules, before resorting to litigation.In the event that the parties fail to settle the dispute through mediation, all parties agree that any further action arising out of or relating to this engagement shall be decided by a court of competent jurisdiction by a judge sitting without a jury. WE BOTH ACKNOWLEDGE AND AGREE THAT WE ARE WAIVING ANY AND ALL RIGHTS WE MAY HAVE TO HAVE SUCH DISPUTE DECIDED BY A JURY [please check to see if this is permissible under local state law].

Our liability relating to the performance of the services rendered under this letter is limited solely to direct damage sustained by the Compan[y/ies]. In no event shall we be liable for the consequential, special, incidental, or punitive loss, damage or expense caused to the Compan[y/ies] or to any third party (including without limitation, lost profits, opportunity costs, etc.). Notwithstanding the foregoing, our maximum liability relating to services rendered under this letter (regardless of form of action, whether in contract, negligence or otherwise) shall be limited to the fees received by us for this engagement. The provisions set forth in this paragraph shall survive the completion of the engagement.

All claims relating to the performance of the services rendered under this letter must be asserted within [3 years] of the delivery of the financial statements or they will be stale and time-barred as a matter of law. This [3-year] limitation period shall be tolled and extended during any period in which the parties are engaged in mediation.

If any provision of this letter is unenforceable, the remaining provisions shall be enforced to the maximum extent possible. If any provision of this letter is overbroad or unreasonable, such provision shall be given effect to the maximum extent possible by narrowing or removing that aspect of the provision found overbroad or unreasonable, and enforcing the remaining portions to the full extent reasonable.

For us to being the work, please sign a copy of this letter as indicated below and return it to us along with the retainer amount (if applicable). If a signed copy of this letter is not returned, we reserve the right to: (1) delay commencement of any work or the allocation of any personnel or other resources to your engagement, and/or (2) terminate the services contemplated in this letter.

We look forward to working with you and enjoying a mutually beneficial relationship.

Very truly yours,

[Accounting Firm]

Agreed and acknowledged:

[Client Representative]

[Client Name]