Is this client the right fit for your firm?
Yue Jin (Christina)
Acct 531
Sep 24th 2013
Article summary #2
Is this client the right fit for your firm?
Summary:
This article talks about how the CPA firms can avoid the problem clients before they cause troubles. The article demonstrates some basic steps for all clients’ engagement, then tells us how to deal with higher-risk engagement, and finally talks about how the CPA firms can formalize the engagement process.
Firstly, the main points of basic steps for all clients and engagements are CPA firms should evaluate prospective client integrity, which means that inquiring the management, third party references (bankers, attorney, business consultants), and previous CPA firms. Meanwhile, the CPA firms should perform engagement with professional competence. CPA firms should consider whether the requested services could be completed independently in accordance with applicable professional standards. The final basic step is that firm should consider risks related to the particular engagement. It involves evaluation of clients’ financial condition, current and future economic and regulatory environment, and turnover of management and staff.
In terms of higher-risk engagement, CPA firms should additionally perform a background check on key members, review entity’s public records and detailed review of previous financial statements and tax returns.
To formalize preliminary engagement process, CPA firms should develop a new client acceptance checklist to document the decision-making process. Also, firms should establish a new client acceptance committee to evaluate the new or continuous client engagement.
Accepting a new client involves more potential risk than work with the clients that CPA firms know for a long time. CPA firms should perform a thorough preliminary engagement process, before being trapped into audit dilemma and regretting the acceptance of audit.
Acct 531
Sep 24th 2013
Article summary #2
Is this client the right fit for your firm?
Summary:
This article talks about how the CPA firms can avoid the problem clients before they cause troubles. The article demonstrates some basic steps for all clients’ engagement, then tells us how to deal with higher-risk engagement, and finally talks about how the CPA firms can formalize the engagement process.
Firstly, the main points of basic steps for all clients and engagements are CPA firms should evaluate prospective client integrity, which means that inquiring the management, third party references (bankers, attorney, business consultants), and previous CPA firms. Meanwhile, the CPA firms should perform engagement with professional competence. CPA firms should consider whether the requested services could be completed independently in accordance with applicable professional standards. The final basic step is that firm should consider risks related to the particular engagement. It involves evaluation of clients’ financial condition, current and future economic and regulatory environment, and turnover of management and staff.
In terms of higher-risk engagement, CPA firms should additionally perform a background check on key members, review entity’s public records and detailed review of previous financial statements and tax returns.
To formalize preliminary engagement process, CPA firms should develop a new client acceptance checklist to document the decision-making process. Also, firms should establish a new client acceptance committee to evaluate the new or continuous client engagement.
Accepting a new client involves more potential risk than work with the clients that CPA firms know for a long time. CPA firms should perform a thorough preliminary engagement process, before being trapped into audit dilemma and regretting the acceptance of audit.