ENGAGEMENT LETTER FOR AGREED-UPON PROCEDURES OF FINANCIAL

FORECAST OR PROJECTION

Dear [Name]:

Option 1: Financial forecast

This letter is intended to outline our understanding of the nature and scope of the engagement for
applying agreed-upon procedures to the financial forecast of [Entity] as of [date], for the [period]
then ended.

A financial forecast presents, to the best of management’s knowledge and belief, [Entity’s]
expected financial position, results of operations, and cash flows for the forecast period. It is
based on management’s assumptions reflecting conditions it expects to exist and on the course of
action it expects to take during the forecast period.

We will apply the following procedures, which [user] has specified. [List procedures to be
applied].

We make no representation regarding the adequacy of these procedures for [user]’s purposes.

Usually, there will be differences between the forecasted and actual results, because events and
circumstances frequently do not occur as expected, and those differences may be material. Our
report will contain a statement to that effect.

Our report will detail our findings. Should we have any reservations with respect to the forecast,
we will discuss them with you before the report is issued.

We have no responsibility to update our report to include events and circumstances occurring
after the date of our report.

The distribution of our report is to be limited to [user].

(If applicable)

The procedures that we will perform will not constitute an examination and/or compilation under
Standards established by the American Institute of Certified Public Accountants. Therefore, we
will not issue an opinion and/or compilation report on the prospective financial statements.

At the conclusion of the engagement, management agrees to supply us with a representation

letter that, among other things, will confirm management’s responsibility for the underlying
assumptions and the appropriateness of the financial forecast and its presentation.
Option 2: Financial projection

A financial projection presents, to the best of management’s knowledge and belief, [Entity’s]
expected financial position, results of operations, and cash flows for the projection period,
assuming [describe hypothetical assumptions]. It is based on management’s assumptions
reflecting conditions it expects would exist and courses of action it expects would be taken,
assuming [describe hypothetical assumptions].

Management is responsible for representations about its plans and expectations and for
disclosure of significant information that might affect the ultimate realization of the projected
results.

We will apply the following procedures, which [user] has specified. [List the procedures to be
applied.]

We make no representation regarding the adequacy of these procedures for [user]’s purpose.

Even if [state hypothetical assumptions] were to occur, there will usually be differences between
the projected and actual results, because events and circumstances frequently do not occur as
expected. If the differences are material, our report will contain a statement to that effect.

Our report will detail our findings. Should we have any reservations with respect to the
projection, we will discuss them with you before the report is issued.

We have no responsibility to update our report to include events and circumstances occurring
after the date of our report.

The distribution of our report is to be limited to [user].

At the conclusion of the engagement, management agrees to supply us with a representation

letter that, among other things, will confirm management’s responsibility for the underlying
assumptions and the appropriateness of the financial projection and its presentation.

Closing Language—To Be Used with Both Option (1) and Option (2)

Our fees for these services will be [at our regular rates/$[amount]] plus out-of-pocket expenses.
We will notify you immediately of any circumstances we encounter that materially affect our
total estimated fees. We will submit interim billings as work progresses and as we incur
expenses. Monthly invoices are payable upon receipt, and continuation of services is contingent
upon timely payments. We will assess a finance charge of [percent]% per month to all accounts
over 30 days old.

If these terms are acceptable to you and the services outlined are in accordance with your
understanding, please sign below and return this letter to my attention. A copy is enclosed for
your files.
We look forward to working with you and your staff, and we appreciate the opportunity to serve
you. Please call if you have any questions about this engagement.

Sincerely,

[Firm]

Approved:

By

Date