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Glossary/Engagements and reports

Client continuance

Client continuance is a firm's periodic decision whether to keep serving an existing client, based on updated information about management integrity, independence, fees, risk, and the firm's capacity to perform the work.

CORAA TeamUpdated November 5, 2026

Definition

Client continuance is the ongoing counterpart to acceptance. SQMS No. 1 addresses acceptance and continuance together, so a firm must have policies for deciding whether to continue a client relationship or a recurring engagement, and the partner must determine that those policies were followed. AU-C 220 also addresses information obtained after acceptance. If the team learns something that would have led the firm to decline the engagement had it been known earlier, the partner communicates it promptly to the firm so the firm can decide what to do.

Why it matters in an audit or review

Continuance is where a firm acts on what a year of work revealed: a fraud, aggressive reporting, late payment, scope pressure, or a change in ownership. Documentation of the annual decision supports the firm's quality management and peer review.

Example

Illustrative: during a recurring audit, the team finds that the owner overrode controls to hide related-party loans. The partner informs the firm, which reviews the matter, considers its legal and professional responsibilities, and decides whether to continue and under what terms.

Common mistakes

  • Renewing an engagement letter automatically without rechecking independence.
  • Failing to document why a high-risk client was kept.

Sources

  • AICPA, Statement on Quality Management Standards No. 1, A Firm's System of Quality Management (QM section 10)
  • AICPA, AU-C section 220, Quality Management for an Engagement Conducted in Accordance with GAAS
  • AICPA, AU-C section 210, Terms of Engagement (recurring audits)

Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error

Standards

AU-C 220SQMS 1AU-C 210

Related terms

  • Engagement acceptance
    Engagement acceptance is the firm's decision to take on a specific engagement after evaluating the client's integrity, the firm's competence, capacity and independence, and whether the preconditions for the engagement are present.
  • System of quality management
    A system of quality management is a firm's set of policies and procedures built around quality objectives, assessed quality risks and responses. SQMS No. 1 organizes it into eight components.
  • Independence
    Independence for an auditor means independence of mind and independence in appearance. It is required for audits and reviews, and under the AICPA Code it is judged using a conceptual framework.
  • Engagement letter
    An engagement letter is the written agreement between the firm and the client that sets the engagement's objective, scope, management's responsibilities, reporting, and fees, as AU-C 210 requires for audits.

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