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An overview of the client screening process

By Rickard Jorgensen, FCII, ACIArb, ARM

Extracted from Evaluating Clients – Engagement risk screening for CPA firms.

There are solid reasons for screening new clients.  Many involve not getting paid, exposure to lawsuits or even the stress related to difficult individuals.  Effective client screening can avoid these problems.

Implementing a formal screening process is the most effective.  Starting from a meeting to get to know the client and establish what they want from you thru to a deep dive of gathering information from former service providers including past CPAs, performing a cold review of past reports, interviewing vendors and key staff, to a formal background checks of the management team – all this assists in the evaluation process.

You need to be assured that the client is coming to you for the right reasons and that your professional efforts can help the client improve their business.  You don’t want to inherit another CPAs problem child.  Some red flag issues may be:

  • Third party reliance on work product like outside investors or lenders
  • The quality of the management team
  • Transactions with related entities or reliance or a single large client for revenue.
  • Long term profitability and unrealistic performance goals
  • Lack of internal controls and staff competence
  • High risk industry and regulatory environment.

Early assessment of a potential client can help you better understand what the engagement risks are and also to really determine if you can add value to the potential client.  Using a thorough Evaluation Checklist is a useful tool to help in this process.  A good example may be found at:

The following areas should be of most concern:

  • An integrity check – how does the client run their business?
  • Check for financial issues and vulnerability to be deceived.

Adding an indemnification or limitation of liability provision to an engagement letter helps to avoid a lawsuit; a mediation clause can cut short the time and expense of a lawsuit; assigning your most experienced staff to on-board an engagement; and carefully documenting the engagement can all help.

You should not be afraid to terminate an engagement if there are signs of dishonesty or odd behavior.  But termination process is itself a fraught process that should be carefully managed.  For some guidance on this go to:

If you would like a copy of the complete whitepaper Evaluating Clients – Engagement risk screening for CPA firms please contact Rickard Jorgensen on (201) 345 2440 or send Rick a note at


Jorgensen & Company are not attorneys and do not offer any form of legal advice. Consult with appropriately qualified local counsel for more assistance. Rickard Jorgensen is President and Chief Underwriting Officer for the CPAGold™ program and may be contacted at (201) 345 2440 or

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