Acceptance and Continuance of Clients

Acceptance and continuance of clients was one of the 9 elements of quality control mandated in 1974 by Statements of Auditing Standards (SAS) No. 4 entitled ''Quality Control Considerations for a Firm of Independent Auditors.'' Since 1979, a firm's quality control system is required to have 3 basic...

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Journal Title: The CPA Journal Vol. 50; no. 10; pp. 29 - 34
Author: Wayne Bremser
Format: Article
Language: English
Published: October 1980
Subjects:
Online Access: Full Text
Summary: Acceptance and continuance of clients was one of the 9 elements of quality control mandated in 1974 by Statements of Auditing Standards (SAS) No. 4 entitled ''Quality Control Considerations for a Firm of Independent Auditors.'' Since 1979, a firm's quality control system is required to have 3 basic qualities: 1. assignment of responsibilities that effectively implements a firm's quality control policies and procedures, 2. communication of such policies to personnel, and 3. monitoring the system's effectiveness. Acceptance procedures of approving prospective clients should include: 1. a review of available financial information, 2. inquiries with predecessor auditors as required by auditing standards, 3. consideration of the riskiness of the engagement, and 4. evaluation of the firm's ability to serve the client. A client acceptance form can be helpful for guiding and documenting the evaluation process. A formalized quality control system can identify important changes which may call for modifications or termination of the engagement with a client.
ISSN: 0732-8435