Final answer:
An engagement letter is a contract that defines the legal relationship and obligations between a professional service provider and their client. It outlines the scope of work, fee structure, and terms of the engagement. Engagement letters are essential in establishing clear understanding and protecting both parties.
Step-by-step explanation:
The statement is false. An engagement letter is a contract that defines the legal relationship and obligations between a professional service provider, such as an accountant or attorney, and their client. It outlines the scope of work, fee structure, and terms of the engagement. It serves as a formal agreement to ensure both parties understand their roles and responsibilities.
For example, in the legal field, an engagement letter would specify the lawyer's responsibilities, such as providing legal advice or representing the client in court, while the client's obligations might include providing necessary documents or paying fees.
Engagement letters are essential in establishing a clear understanding of the terms and expectations of the professional engagement. They help protect both parties and provide a foundation for a successful working relationship.