what to do now … before the big rush
must-dos related to client acceptance and continuance
What’s another critical risk management tool? Selecting the right client. This section helps you identify clients that may become troublesome.
Review the firm’s client list from the prior tax season. Consider terminating the firm’s professional relationship with unprofitable and "problem" clients, such as those who do not provide information in a timely manner, and those who are overly aggressive, as discussed in Avoiding Fallout from Aggressive Tax Strategies. Consider the client’s risk profile and whether it continues to be the right fit for the firm. If you remain unsure, read, Take a Hike: Ending Client Relationships, for additional considerations. If the decision is made to terminate the client, Client Termination Letters explains how to write a termination letter and provides sample content.
Identify and address clients that may create a potential conflict of interest for the firm. Review the firm’s existing client list at least annually to determine if conflicts exist. Once identified, follow the guidance in A Framework for Maintaining Ethics Compliance, to evaluate the potential conflict and determine if the threat to objectivity can be reduced to an acceptable level and services can be provided. If services can be rendered, review the articles, Managing Conflicts of Interest and Considerations to Help Avoid Becoming a Casualty in the Divorce Wars.
Establish protocols to address potential conflicts that may arise after the annual review has been completed.
Update the firm’s client acceptance checklist and conduct due diligence on prospective clients. Inquire why they are changing accountants. Does a potential conflict of interest exist with an existing client? Conduct an internet search on the prospect. Request the prospect’s consent to contact the predecessor accountant. Consider obtaining a retainer fee from new clients as a condition of engagement. The article, Client Acceptance: A liability gatekeeper, includes other criteria to consider in balancing the risks and rewards of accepting a prospective client.