Australian engagement guidance is changing. Is your firm ready?

CA ANZ has released an updated Engagement Letter Tool for Australia, incorporating changes linked to APES 305, the Tax Agent Services (Code of Professional Conduct) Determination 2024 and emerging AML/CTF obligations.

With AML obligations approaching from 1 July, and CPA Australia and other membership bodies also expected to release updated guidance and resources, accounting firms should be reviewing their engagement processes now.

For many firms, this is more than a template refresh. It’s another clear sign that engagement management is becoming one of the most important operational and compliance processes inside a practice.

One of the most significant additions to the updated guidance is the inclusion of detailed AML/CTF clauses directly within the recommended engagement terms and conditions.

These clauses reference obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act (Cth) and associated customer due diligence requirements.

The wording now includes:

• identity verification requirements
• beneficial ownership checks
• customer due diligence obligations
• ongoing monitoring obligations
• regulatory reporting obligations
• the ability to suspend or terminate services where AML requirements cannot be completed

This is an important operational shift.

By including these obligations directly within the engagement terms, CA ANZ may be signalling that firms should formally engage the client and establish the AML/CTF framework before undertaking identity verification and customer due diligence procedures.

That makes practical sense. The engagement can:

• explain why information is being collected
• obtain client acknowledgement and consent
• outline ongoing obligations
• disclose potential reporting requirements
• clearly communicate what happens if AML requirements cannot be satisfied

In practice, engagement workflows become the starting point for communicating AML obligations, obtaining client acknowledgement and managing the broader compliance process.

Many firms are still operating with engagement terms that pre-date:

• the updated TPB disclosure requirements
• expanded outsourcing and cloud disclosures
• AI and offshore processing discussions
• the incoming AML framework

That creates a practical problem.

Ongoing and open-ended engagement arrangements are still common, and are mentioned within the CA ANZ guidance. But many firms have not substantially reviewed or updated their engagement terms in years.

If the engagement no longer reflects how services are actually being delivered, firms are exposed operationally, commercially and from a compliance perspective.

The updated CA ANZ guidance reinforces the need for firms to regularly review and update engagement terms as services and obligations evolve.

The updated guidance also incorporates wording linked to the Tax Agent Services (Code of Professional Conduct) Determination 2024.

Recommended additions now include:

• references to the TPB public register
• complaints process disclosures
• client rights and responsibilities information
• disclosure of registration conditions and disciplinary matters
• links to TPB fact sheets and guidance

There is also increased focus on:

• outsourced service providers
• cloud computing arrangements
• overseas data storage
• third-party technology providers
• how client information is stored and accessed

For firms using AI tools, offshore support teams or multiple cloud platforms, these disclosures are becoming increasingly important.

The challenge for firms is not simply updating wording once. It’s managing an engagement process at scale.

That includes:

• updating large client bases
• ensuring consistent wording
• tracking acceptances
• managing annual updates
• controlling scope creep
• maintaining visibility across the practice

This is where Ignition comes in.

Ignition helps firms standardise engagement terms, streamline the re-engagement process and maintain greater control over engagement updates as obligations continue to evolve.

The reality is that the regulatory environment is not getting simpler. Accountants’ obligations are increasing, disclosure requirements are expanding, and the technology environment is changing quickly.

The risk for firms is not just having no engagement in place. It’s having engagement terms that no longer reflect the reality of how services are delivered