Question

Client acceptance is an important part of the pre-engagement planning process for a CPA. For an existing client, this process often involves reviewing the firm's financial performance on the previous year's engagement, debriefing with the prior year team regarding any issues working with the client, reviewing public information about the company's activities during the year, and considering other factors to determine the relative risk to the firm to perform services for that client for another year. For a new client to a firm, the client acceptance process should be a more robust evaluation as a new client brings a relatively unknown level of risk to the firm.

Required:

If you were the audit partner in charge of the new client acceptance process, what would be the three most important pieces of information that you would want to review about that company before engaging to perform an audit for the new client?

Answer 1

In my view following would be the most important three factors in the acceptance process -->

1. Market Standing : Besides the market share the image of the client in the market and among other professionals of the field.This shall directly impact my brand as well.In coould be that a prospective client is not a huge player but carries immense repect , definitely worth a consideration.

2. Information Transparency: Is the culture of the client is of transparency? This is another important factor because this woould have direct bearing on the quality of delivery of audit assignment.

3. Financial Strength : Ofcourse this is important factor to be taken into consideration to ensure client is ina position to make timely and full payment for the services rendered.