Managing the Risks of Client Acceptance and Continuance

Auditors have several obligations to their customers, but they also have a responsibility to maintain the public's confidence. Auditors' reputations can occasionally be harmed by the unfavourable consequences of their clients' behaviour. This can be avoided by thoroughly screening clients and their actions at every level of an engagement. The authors offer tips from a range of experts on how to handle client acceptance, retention, and when necessary disengagement.

No auditor wants to find that a client has been accused of fraud after issuing a clear audit opinion. Yet if a CPA company does not adhere to industry-recommended client acceptance and continuance policies, that risk is present, in addition to many others.

In one recent instance, defence lawyer Thomas R. Manisero of Wilson Elser represented an accounting firm that, following its merger with another firm, conducted an audit for an investment fund. Although the service area was particularly high risk and outside the firm's typical scope of services, the merger gave rise to an engagement partner with the necessary experience to oversee the audit. However, that partner got handicapped during the audit, so the firm instead of cutting ties with the client in favour of another engagement partner who had less experience with the audit in question, which was a mistake.


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Adarsh R

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