Page 73 - M & A Disputes

engagement letter that permits the neutral accountant to resign from the assignment should an actual or a
potential conflict of interest arise.

Disclaimer That the Services Are Not an Audit

A clear statement should be included in the engagement letter that the services being provided by the
neutral practitioner are not audit or attestation services, as those services are defined by the relevant
AICPA literature. Further, it should be unambiguous that the practitioner is not rendering a professional
opinion on whether the financial statements underlying the transaction between the parties are fairly pre-
sented in conformity with GAAP.

Hold-Harmless Clause

As a condition to accepting the assignment to serve as the neutral practitioner, the practitioner should
obtain from the parties their acknowledgement and agreement that, in the event that the practitioner pro-
vides neutral services, the practitioner will have no liability or obligation with respect to these services
so long as the practitioner, in providing these services, acted in good faith and to the best of his or her
ability.

Identification of the Neutral Practitioner

In addition to the practitioner, other professionals from the practitioner’s organization who are anticipat-
ed to support the neutral practitioner in the performance of the arbitration assignment may be named or
described in the engagement letter. Because it may be difficult to determine at the outset of the assign-
ment all the professional resources that may be required to render the services for the parties, qualifying
language may be considered that would permit the neutral practitioner to supplement the team at his or
her sole discretion but with advanced notice to the parties should such a situation arise during the en-
gagement.

Description of the Agreed-Upon Format or Process for the Proceeding

Many times, the original transaction agreement between the parties, such as the stock or asset purchase
agreement, will describe a process for resolving any dispute that may arise relative to the transaction.
However, most often, the process described within the transaction agreement will simply state that once
a dispute has arisen that cannot be resolved by the parties, it will be referred to a neutral practitioner.
Therefore, the practitioner, in the engagement letter, should establish a clear and distinct set of process-
es, protocols, and deadlines that the parties will follow during the course of the arbitration proceeding.
Such processes, protocols, and due dates may include a set of procedures by which the parties prepare
and submit to the neutral practitioner writings that set forth their understanding of the nature of the dis-
puted items together with the rationale for their position. The processes, protocols, and due dates may
also include schedules for hearings to be conducted, if deemed necessary by the neutral practitioner, dur-
ing which each party will be afforded the opportunity to present its position to the neutral practitioner.
Obviously, the parties should be in agreement with the procedures proposed by the neutral practitioner.
However, in most instances, the parties will look to the practitioner to provide direction for the manner
in which the arbitration proceeding should be conducted. In those instances when the original transac-
tion agreement already describes the processes that the parties are to follow with regard to the resolution
of the dispute, the practitioner should consider, in consultation with the parties, whether the processes,
as described in the transaction agreement, including timing, can be adhered to.

© 2020 Association of International Certified Professional Accountants 71