An engagement letter defines the legal relationship (or engagement) between a professional firm (e.g., law, investment banking, consulting, advisory or accountancy firm) and its client(s). This letter states the terms and conditions of the engagement, principally addressing the scope of the engagement and the terms of compensation for the firm. The independence of the auditor or accountant is stressed in such a letter. The Institute of Chartered Accountants in England and Wales provides guidance on letters of engagement for the accounting profession.

Most engagement letters follow a standard format. The example given below refers to the engagement of an accountancy firm.