Client Acceptance / Continuance Risk Scorecard — SA 220 / SQM 1
CLIENT ACCEPTANCE / CONTINUANCE RISK SCORECARD
Prospective/existing client: {{client_name}} · Evaluation for year ending: {{period_end}} · Evaluated by: __________ · Date: 20 July 2026
Purpose: score client acceptance or continuance risk per SA 220 and the firm's SQC 1 / SQM 1 quality-control policies, so acceptance/decline is a documented, evidenced decision rather than an undocumented judgement call — and so files needing an Engagement Quality Control Reviewer (EQCR) are flagged before the engagement starts.
Part A — Client integrity
| Factor | Score (0 = no concern, 1 = minor, 2 = significant) | Notes |
|---|
| Identity and beneficial ownership of promoters/management verified (KYC) | | |
| Reputation of promoters/management/those charged with governance — adverse media, litigation, regulatory action | | |
| Reason for change of auditor (continuance: reason for staying; acceptance: reason predecessor left) obtained and assessed — NOC from predecessor received | | |
| Aggressive attitude towards accounting estimates / minimising disclosures observed in discussions | | |
| Scope limitations proposed by management (restricted access to records, personnel, locations) | | |
| Unusual urgency in timeline or fee negotiation that pressures audit quality | | |
Part B — Firm competence and resources
| Factor | Score (0-2) | Notes |
|---|
| Industry/sector expertise available in the firm for this engagement | | |
| Specialist knowledge required (IT, valuation, actuarial, forensic) and access confirmed | | |
| Staffing and partner time available without compromising other engagements | | |
| Language / geography / multi-location coverage the engagement needs | | |
Part C — Independence and fee dependence
| Factor | Score (0-2) | Notes |
|---|
| Any financial, business, family or employment relationship with the client creating a self-interest, familiarity or intimidation threat | | |
| Non-assurance services provided/proposed to this client — self-review threat assessed (esp. PIE clients, per the 2026 Code of Ethics restrictions) | | |
| 40% fee-dependence test: would this client's gross fees exceed 40% of the firm's total professional fees for two consecutive years? (Paragraphs 410.3–R410.6, in force since 1 Oct 2022; firms with total fees ≤ ₹20 lakh are exempt) — if Y, disclosure to the client and reporting to ICAI is required | | |
| Cooling-off / rotation status current and compliant (Sec 139(2) where applicable) | | |
| Safeguards identified and documented where any threat scores above zero | | |
Part D — Sector and engagement risk
| Factor | Score (0-2) | Notes |
|---|
| Regulatory intensity of the sector (listed / bank / NBFC / insurance / PIE) | | |
| Going concern indicators present at acceptance | | |
| Complexity of transactions (related parties, group structure, related-party financing, related judgement areas) | | |
| History of restatements, NFRA/ICAI inspection findings, or peer review observations on this client's prior audits | | |
| Litigation/fraud history involving the client or its group | | |
Part E — Score summary and decision
| Part | Maximum possible | Score obtained |
|---|
| A — Client integrity | | |
| B — Firm competence | | |
| C — Independence / fee dependence | | |
| D — Sector / engagement risk | | |
| Total | | |
Decision routing (adapt bands to the firm's own SQC 1 / SQM 1 policy): low total score → accept/continue; moderate score → accept/continue WITH an Engagement Quality Control Reviewer (EQCR) assigned; high score, or any single Part-A factor scoring 2, → decline or escalate to the firm's risk/ethics partner before proceeding. A score threshold does not override a hard-stop factor (e.g. confirmed integrity concern, independence threat with no available safeguard) — any such factor is a decline regardless of the total.
| Decision | EQCR required? (Y/N) | Approved by (risk/ethics partner, if escalated) |
|---|
| | |
This evaluation is repeated at least annually for continuing clients (SA 220 continuance) and whenever a significant event occurs (change in ownership, management, litigation, or scope).
