Client Screening (1) Flashcards
What do many firms do?
Carry out stringent checks on potential client companies and their management
What is management integrity?
Integrity of those managing a company will be of great importance, particularly if company is controlled by one or a few dominant personalities
Low risk audit client (prospects)
Good long-term prospects
Low risk audit client (financed)
Well-financed
Low risk audit client (controls)
Strong internal controls
Low risk audit client (policies)
Conserative, prudent accounting policies
Low risk audit client (management)
Competent, honest management
Low risk audit client (transactions)
Few usual transactions
High risk audit client (performance)
Poor recent or forecast performance
High risk audit client (finance)
Likely lack of finance
High risk audit client (control)
Significant control deficiencies
High risk audit client (integrity)
Evidence of questionable integrity, doubtful accounting policies
High risk audit client (director)
Lack of finance director
High risk audit client (transactions)
Significant related party or unexplained transactions
