Client And Acceptance form PDF

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CLIE IEN T / ENG AG EMEN T ACC CCEPTANC NCE E FORM Client Name:

Balance Sheet Date:

Completed By:

Date:

ECTIO N A: BASIC CLIENT IN F ORM RMATI TIO N SEC 1. GENE NERA RAL INF NFORMATION Phone:

Street Address:

Fax: City/State/Zip:

Website: Direct/Mobile Phone:

Primary Contact: Title:

Email:

Billing Address:

Billing Attention:

City/State/Zip:

Email:

2. MAN AGEME MENT NT A) List the principal members of management. (Designate the principal audit contact with an *.) Name and Title

Name and Title

B) Discuss any factors that should be known about key client management (i.e. experience, age, health, ease of replacement, etc.):

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CLIENT / ENGAGEMENT ACCEPTANCE FORM (CONTINUED) 2 . MAN AGEME MENT NT (continued) C) List audit committee members and identify the committee chair: Name Chair:

Name Member:

Member:

3. IND UST ST RY Y A) In what industries does the company operate?

B)

Describe the company’s key products or services, and how the products or services are used:

C) Describe any special regulatory or reporting requirements that apply to companies in the industry:

4. FINANC I AL H IGHL HLIGHT HTS A) Describe historical financial information:

Historical financial information as of Cash and cash equivalents Liquid investments Other current assets Current liabilities Debt Retained earnings (accumulated deficit) Revenue Operating income (loss) Income (loss) before taxes Cash flow from operations

B) Describe risks related to the nature of the company’s major assets and liabilities:

C) Describe the risks related to the sources of the company’s revenues and marketing methods:

D) Does the Company face liquidity issues (e.g. going concern opinion, loan defaults, etc.):

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CLIENT / ENGAGEMENT ACCEPTANCE FORM (CONTINUED) AN NI ES 5. PUB UB LIC IC COMP MPA S O NLY LY A) Is the potential client an SEC issuer as defined? (if “Yes” continue to questions B-E; if “No” move to next section) Yes

No

B) Is the potential client (check one): N/A, new Company under formation, no filings required at the time of our acceptance. a small business filer (as defined)? an “S-X” filer (as defined)? an accelerated filer (as defined)? a large accelerated filer (as defined)? C) Is the client current on its public filings? Yes

No

D) Has the client filed an extension or been delinquent with its 34 Act filings within the last two years? Yes

No

6. PRI RIVAT ATE CO M PAN AN I ES S ON ONL Y A) Does the company expect to become public within two years? Yes

No

SECTI TION B: B: CLI LIENT PR OF I LE E AND D OVERA RAL L PR ELIM IMINAR ARY Y RI RI S K ASS SSESSMEN T AREA OF CONSIDERATION I..

YES

NO

N/A

COMMENTS

RIS K F ACT CTORS RS

Consider whether information you have gathered about the company, its operations, and its industry indicates incentives or pressures or opportunities for management to intentionally misstate the financial statements. Describe below if any. 1. Has the potential client ever been audited? 2. Is the size of the accounting department considered reasonable in relation to the size and the nature of the potential client’s operations? Describe the nature of related party transactions, if any. 3. Briefly describe the intended use of the audited or other financial statements (e.g. sale of company, IPO, creditor requirements, pending public shell reverse merger, etc.). 4. Briefly describe the organizational structure of the potential client and its accounting department.

5. For prior periods, were the audit opinions other than “unqualified”? Describe in detail if the answer is “Yes”.

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CLIENT / ENGAGEMENT ACCEPTANCE FORM (CONTINUED) AREA OF CONSIDERATION 6. Were there any disagreements or other matters reported on Form 8-K regarding the change in auditors?

YES

NO

N/A

COMMENTS

7. Has the client restated the results of its operations within the last three years? If so, state the nature and amount of each restatement. 8. Has the client had any material weaknesses, reportable conditions or significant unremediated internal control deficiencies within the last three years? 9. Does the client have an Audit Committee or equivalent? 10. Does the client have an effective internal audit function? 11. Does the client use service organizations? If so, state the nature and type of services. I I..

MA MANA NAGEME ME NTT IN INTE TEGR GRITY

12. Are there any concerns about management’s integrity based on contacts or discussions with others? 13. Are there any concerns about management’s integrity based on reading Form 8-Ks, if applicable, to determine any changes in officers or directors, including resignations or declinations to stand for reelection? 14. Are there any concerns about management’s integrity that might be derived from SEC or other regulatory actions in process or settled?

IIIII.. INDEPE E PE NDE DENC N CE 15. What services does the company desire from our firm? Audit of financial statements? Audit of internal control? Preparation of tax returns? (Specify):

Due diligence? (Specify):

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CLIENT / ENGAGEMENT ACCEPTANCE FORM (CONTINUED) AREA OF CONSIDERATION Agreed upon procedures? (Specify):

YES

NO

N/A

COMMENTS

Other? (Specify): 16. Document consideration of whether the firm is independent of the prospective client by answering the following questions (for SEC reporting clients). The SEC expects accountants to comply with the independence requirements established by the Independence Standards Board and the accounting profession (the AICPA), as well as the requirements promulgated by the Commission and its staff. The SEC’s independence rules are set forth in Rule 201 of Regulation S-X. Rule 2-01’s general standard of independence requires both the fact and the appearance of independence. a. Have all audit and allowable nonaudit services been (or will be) pre-approved by the audit committee? Explain a “No” answer. b. Has an audit partner received (or is expected to receive) compensation for procuring engagements to provide products or services to the client other than the audit, review, or attest services? Explain a “Yes” answer. c.

Does the firm, any covered person, or any covered person’s immediate family members have a direct or material indirect financial interest in the client or in an entity over which the client has significant influence? Explain a “Yes” answer.

d. Does the client have an interest in our firm; or has the client been engaged to be an underwriter, broker-dealer, market maker, promoter, or analyst for the firm’s issuance of securities? Explain a “Yes” answer. e. Have material fees for other services been collected? (Example: Tax client that now requires audit services) Explain a “No” answer. f.

Do the fees for this client, and its related group, represent a significant portion (≥15%) of the firm’s total revenue? Explain a “Yes” answer.

g. Are there any relationships with the prospective client or conflicts of interests that might impair independence? Explain “Yes” answers. i. ii.

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Employment relationships? Business relationships?

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CLIENT / ENGAGEMENT ACCEPTANCE FORM (CONTINUED) AREA OF CONSIDERATION iii. Contingent fee or commission arrangements? iv.

Competing against the client?

v.

Litigation?

vi.

Indemnification?

vii.

Other? (Specify.)

YES

NO

N/A

COMMENTS

17. Have any prohibited non-audit services been performed for this client? Explain a “Yes” answer.

ROUND CHEC ECKS KS I V.. BAC K GRO 18. Have background checks been obtained for: a. Audit committee chairman b. Chief Executive Officer c. Chief Financial Officer d. Controller e. Other 19. Have the results of the background checks raised any concerns about management’s integrity? D escribe and attach background check reports.

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CLIENT / ENGAGEMENT ACCEPTANCE FORM (CONTINUED)

SECTI ON C C:: EN NG GA AGE MENT NT ECO NOMICS Document your consideration of whether the engagement meets the firm’s standards from an economic standpoint. Document the following: Proposed budget Proposed fees

$ $

Total engagement hours Expected realization

%

SEC ECTI TION D:: P RED ED ECE CESSO SOR AUD UDIT ITO R’ S CO MMUNICATI ONS AN AND D RE FER ERENCES YES I.

NO

N/A

COMMENTS

P R EDE DE CE SSO SOR’ R’S COM OMMUN I CATIO ION N

1. Document the results of communications with the predecessor auditor. Inquired of Name

Firm

Title

Date

a. Has the predecessor auditor had disputes with the client about accounting principles, proposed adjustments, or other significant matters? b. Has the predecessor auditor been prevented from applying necessary auditing procedures? c.

Does the predecessor auditor have reason to doubt management’s integrity?

d. Have other auditors refused to serve this client? e. Are there unpaid fees owed to the predecessor auditor for services rendered? f.

Are there any fee disputes with the predecessor auditor?

g. Has management been domineering predecessor auditor?

in dealing

with the

h. Has management placed unreasonable demands (such as unrealistic time constraints concerning the audit) on the predecessor auditor? i.

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Has the predecessor auditor had any communications with the client concerning fraud, illegal acts, or internal control related matters?

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CLIENT / ENGAGEMENT ACCEPTANCE FORM (CONTINUED) YES NO N/A COMMENTS 2. Document the identified reasons for a change in auditor and any additional comments based on inquiries of the predecessor auditor.

3. Based on the above, are there any reasons we should not accept the client?

I I.. RE EN NC CE ES RE FER ERE 4. Are there any concerns about management’s integrity based on contacts or discussion with the client’s bankers? Inquired of:

Name

Firm

Title

Date

5. Are there any concerns about management’s integrity based on contacts or discussion with SEC counsel and/or the client’s attorneys? Inquired of:

Name

Firm

Title

Date

6. Are there any concerns about management’s integrity based on contacts or discussion with others having business relationships with the client? Inquired of:

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Name

Firm

Title

Date

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CLIENT / ENGAGEMENT ACCEPTANCE FORM (CONTINUED)

7. Has our review of the latest annual and interim financial statements, income tax returns, auditor’s reports, SEC filings, analysts’ reports, information from rating agencies, press releases, reports to other regulatory agencies, and other auditor communications, if any, or any other circumstances of which we are aware, provided information that would cause us to regard the engagement as requiring special attention or presenting unusual risks or that would cause us not to want to be associated with the potential client? (Specify.)

SECTION E: C LIE IENTT RISK K RAT ATING G (11 - 30 30, 1 == l ow est st scor e, 3 0 = hig ig hes estt score) Considerations of the client risk rating include but are not limited to the following:            

Client is a public company, or plans to make an offering (public or private) in the next 12 months. Client has history of a going concern issue and/or negative cash flow from operating activities. Client is litigious as a plaintiff. Client restated its financial statements (interim or annual) and/or amended a Form 10-K or 10-Q at least once in the past 18 months. Client actively files registration statements. Client’s audit committee or Board of Directors does not have any independent members. Client frequently has complex accounting transactions. Client is planning to sell the Company within 12 months. Client has a history of multiple related party transactions. Client’s market cap is > $6 million. Client’s quality of accounting records is at times less than adequate. Client does not always pay audit fees on a timely basis. Client Risk Rating:

SE AN NC CE AL ACC EPT PTA E OR OR RE REJE JE CTI TION ON SEC TIO N F : F INAL

We

should

accept the client / engagement.

should not

Engagement partner name:

Engagement Partner Signature: X_________________________________________

Date:

Concurring partner name:

Concurring Partner Signature: X_________________________________________

Date:

.

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