List the risk factors your firm looks at before taking on a client, give each a weight for how much it matters and a score for how bad it looks for this client. The tool gives a weighted score as a percentage of the worst case, places it in your own bands, and lists the factors that need escalation on their own.
A higher score means higher risk. The sample factors and weights are placeholders. Use the factors in your firm quality management policy.
This is a structured way to record your judgement, not a decision. Acceptance and continuance must follow your firm policies, the Code of Ethics and the current standards on quality management.
Score is in your medium band. Document how each high-scoring factor will be handled and who approved acceptance.
| Factor | Weight | Score | Weighted | Escalate |
|---|---|---|---|---|
| Integrity and reputation of owners | 5.0 | 2.0 | 10.0 | |
| Complexity of the business | 3.0 | 4.0 | 12.0 | Yes |
| Prior auditor change or dispute | 4.0 | 1.0 | 4.0 | |
| Reliance on a few key customers | 2.0 | 3.0 | 6.0 | |
| Quality of accounting records | 4.0 | 4.0 | 16.0 | Yes |
| Pressure on the proposed fee | 3.0 | 3.0 | 9.0 | |
| Independence or conflict concerns | 5.0 | 1.0 | 5.0 | |
| Firm competence in the sector | 4.0 | 2.0 | 8.0 |
Two partners can look at the same prospect and reach different views, mostly because they weigh the factors differently. Writing the factors down with weights, and agreeing the bands in advance, gives the firm a consistent way to compare prospects and a record of why a risky client was accepted or turned away.
Each factor has a weight and a score from zero to your highest score. The weighted value is weight times score.
The total is divided by the worst case, which is the total weight times the highest score, and shown as a percentage. You choose where the medium and high bands start.
Any single factor scored at or above your escalation level is listed on its own, so one serious concern is not averaged away.
Highest score is 5. Integrity has weight 5 and score 2. Complexity has weight 3 and score 4.
