Client Acceptance and Continuance: A Checklist, and Making It a Gate
A client acceptance and continuance checklist for audit firms, grounded in ISQM 1, ISA 220 (Revised), ISA 210 and the IESBA Code, and how to make it a gate the engagement cannot pass without.
Short answer: Before accepting a new audit client, or continuing with an existing one, a firm must know enough about the engagement and the client's integrity, be able to do the work properly, and not let fees drive the decision (ISQM 1 para 30). Use one checklist, have the engagement partner conclude on it (ISA 220 (Revised) para 22), and let no work start until the terms are agreed in writing (ISA 210).
This guide is for engagement partners, quality management leads and practice managers at audit, tax and accounting firms who want an acceptance and continuance form that stands up at a quality review, and a way to make sure it is completed before the work starts, not reconstructed afterwards. It is written for statutory audits, and most of it applies to reviews and other assurance work.
Creodata sells practice software for audit firms, so we say plainly where we fit near the end. The checklist works on paper or in any system. This is practical guidance, not professional advice: your firm's ISQM 1 policies and your institute's requirements come first.
What the standards require
Four sets of requirements shape acceptance and continuance. They fit together: ISQM 1 sets what the firm must achieve, ISA 220 (Revised) makes the engagement partner responsible for it on each audit, ISA 210 governs the terms, and the IESBA Code covers the ethics.
| Standard | Paragraph | What it requires, in short |
|---|---|---|
| ISQM 1 | 30(a)(i) | Acceptance and continuance judgements rest on enough information about the nature and circumstances of the engagement and the integrity and ethical values of the client, including management and, when appropriate, those charged with governance |
| ISQM 1 | 30(a)(ii) | They also rest on the firm's ability to perform the engagement under professional standards and law |
| ISQM 1 | 30(b) | The firm's financial and operational priorities do not lead to inappropriate acceptance or continuance judgements |
| ISQM 1 | A67–A74 | What information to gather, where from, and the factors bearing on integrity, resources and fees |
| ISA 220 (Revised) | 22 | The engagement partner determines that the firm's acceptance and continuance policies were followed and the conclusions are appropriate |
| ISA 220 (Revised) | 23 | The partner uses what was learned at acceptance in planning and performing the audit |
| ISA 220 (Revised) | 24 | Information found later that would have led the firm to decline must be communicated promptly to the firm |
| ISA 210 | 6, 8 | Establish the preconditions for an audit: an acceptable financial reporting framework and management's acknowledgement of its responsibilities; do not accept without them, unless law requires it |
| ISA 210 | 7 | Do not accept a scope limitation that you expect would lead to a disclaimer of opinion, unless law requires it |
| ISA 210 | 9–10 | Agree the terms and record them in an engagement letter or other written agreement |
| ISA 210 | 13 | On recurring audits, assess whether the terms need revising or the client reminding of them |
| IESBA Code | R320.4, R320.8 | Consider reasons not to accept when replacing another accountant; on an audit or review, ask the predecessor for relevant facts |
| IESBA Code | R320.9 | For a recurring engagement, periodically review whether to continue |
ISQM 1 and ISA 220 (Revised) have applied since 15 December 2022, and national institutes that adopted them inspect against them. In Uganda, for example, ICPAU's audit quality reviews cover ISQM 1 and ISA 220; in Tanzania, NBAA reminded firms that ISQM 1 systems were due by 15 December 2022. In Kenya, ICPAK adopted the ISAs as issued, including their effective dates.
Acceptance versus continuance
The questions are the same; the sources differ.
- New client: you know little. You rely on inquiry of the previous auditor, background searches, discussions with third parties such as bankers and legal counsel, and the client's own documents (ISQM 1 para A69). The predecessor step is covered in our guide to professional clearance letters.
- Continuing client: you know a great deal, some of it uncomfortable. Use the prior year's file, the management letter, fee recovery, disagreements and anything other service lines have learned (para A69). Continuance is a real decision each year, not a formality (IESBA R320.9).
The client acceptance and continuance checklist
Complete it before the engagement letter is signed. Every "No" or "Concern" needs a note on how it was resolved, or a decision to decline.
| # | Question | New | Continuing | Source |
|---|---|---|---|---|
| A | The client and its integrity | |||
| 1 | Identity of the entity, its principal owners, key management and those charged with governance confirmed, including beneficial owners | Yes | Update | ISQM 1 A68 |
| 2 | Business reputation checked: background searches, adverse media, litigation, regulatory action | Yes | Update | A68, A69 |
| 3 | Any indication of money laundering or other criminal activity | Yes | Yes | A68 |
| 4 | Management's attitude to aggressive accounting and to internal control considered | Yes | Yes, from the prior year | A68 |
| 5 | Any pressure to keep fees as low as possible, or signs of a client-imposed scope limitation | Yes | Yes | A68; ISA 210 para 7 |
| 6 | Reasons for the change of auditor, and why the previous firm is not continuing | Yes | n/a | A68 |
| 7 | Identity and reputation of significant related parties | Yes | Update | A68 |
| B | The engagement | |||
| 8 | Nature of the entity: industry, operations, structure, ownership, governance, financing and regulatory factors | Yes | Update | A67 |
| 9 | Financial reporting framework acceptable | Yes | Confirm | ISA 210 para 6(a) |
| 10 | Management acknowledges its responsibilities, including giving access to information and people | Yes | Remind if needed | ISA 210 para 6(b), 13 |
| 11 | Reporting deadline and any regulator's filing dates known | Yes | Yes | A72 |
| 12 | Engagement quality review needed, and an eligible reviewer available | Yes | Yes | A72; ISQM 2 |
| C | The firm's ability to do the work | |||
| 13 | Partner and team with the right competence, industry knowledge and time | Yes | Yes | ISQM 1 30(a)(ii), A72 |
| 14 | Experts, component auditors or specialist tools needed, and available | Yes | Yes | A72 |
| 15 | Access to the information and the people needed | Yes | Yes | A72; ISA 210 6(b)(iii) |
| D | Ethics and independence | |||
| 16 | Independence confirmed for the firm, the team and network firms, including non-audit services and relationships | Yes | Yes | IESBA Code Part 4A |
| 17 | Conflicts of interest checked | Yes | Yes | IESBA Code; ISQM 1 A71 |
| 18 | Communication with the predecessor made, and the reply or the steps taken recorded | Yes | n/a | IESBA R320.8, R320.6 |
| 19 | Long association and partner rotation checked | n/a | Yes | IESBA Code |
| E | Commercial | |||
| 20 | Fee sufficient for the work, and not the reason for accepting | Yes | Yes | ISQM 1 30(b), A73, A74 |
| 21 | Unpaid prior fees and their effect on independence considered | n/a | Yes | IESBA Code |
| F | Conclusion | |||
| 22 | Risk rating for the engagement (for example low, normal, high) | Yes | Yes | Firm policy |
| 23 | Engagement partner's conclusion, signed and dated | Yes | Yes | ISA 220 (Revised) 22 |
| 24 | Second approval where the firm's policy requires it for high-risk clients | If high | If high | Firm policy |
| 25 | Engagement letter issued and signed before work starts | Yes | Revise if needed | ISA 210 paras 9–10, 13 |
Rows 22 and 24 are common firm policies rather than requirements of the standards; keep them if your ISQM 1 responses include them.
Making it a gate
Most firms have an acceptance form. The quality review finding is usually not that the form was missing but that it was completed late: dated after the engagement letter, or after fieldwork began, or never signed by the partner. A gate stops that.
A gate means the next step cannot happen until the evidence for this one is on file. For acceptance and continuance, three gates do most of the work:
- No engagement letter until the acceptance form is concluded. The partner's signed conclusion is the evidence.
- No request list, and no fieldwork, until the signed engagement letter is on file. ISA 210 makes agreed terms a condition of the audit; the request list is the first real work.
- New facts go back to the form. If something emerges during the audit that would have led you to decline, ISA 220 (Revised) para 24 requires the partner to tell the firm. Record it against the same engagement so the continuance review next year starts from it.
On paper, this is a rule in the quality manual. In a system, a stage cannot be completed until its document is filed, and stages complete in order, so the evidence exists before the step that depends on it.
What to record
| Record | Why |
|---|---|
| The completed checklist, with the date each section was done | ISQM 1 para 30; shows it came before acceptance |
| Evidence behind it: searches, identity documents, ownership records | ISQM 1 A68, A69 |
| The predecessor correspondence | IESBA R320.8 |
| Independence and conflict confirmations | IESBA Code |
| The partner's signed conclusion and any second approval | ISA 220 (Revised) para 22 |
| The signed engagement letter | ISA 210 paras 9–10 |
| Anything learned later and how it was handled | ISA 220 (Revised) para 24 |
Where Creodata fits
Creodata is a Nairobi software company. AuditEDMS, our practice software for audit firms, runs each statutory audit as stages from tender to archive. The early stages are the entry meeting and client acceptance, professional clearance, the engagement letter and the request for information. The completed acceptance form and the KYC documents are filed against the entry meeting and KYC stage. Clearance comes before the engagement letter, so the engagement is formally accepted only after the predecessor has been asked, consistent with IESBA R320.8; the clearance wait is a firm setting, and anything the reply raises goes back to the acceptance form. Evidence gates stop a stage completing until its document is filed, and stages complete in order: the engagement letter cannot be completed until clearance is completed or skipped, and the request for information cannot go out until the signed engagement letter is on file.
Every document goes to your own SharePoint by client, engagement and document type, recording who filed it and when. Every action is written to an audit trail. The engagement prints as a compliance view showing each stage, its evidence, its dates and who completed it, which is what a quality reviewer asks to see. The stage templates are configuration, set up with you during implementation. AuditEDMS works alongside your working-paper software; it does not replace it. See AuditEDMS for audit firms.
Frequently asked questions
What is client acceptance and continuance in audit?
It is the firm's process for deciding whether to take on a new client or engagement, and whether to keep an existing one. ISQM 1 sets the quality objectives (para 30), and ISA 220 (Revised) makes the engagement partner responsible for confirming the firm's procedures were followed on each audit (para 22).
How often should continuance be reviewed?
The IESBA Code requires a periodic review for recurring engagements (R320.9), and ISA 210 requires you to assess on each recurring audit whether the terms need revising (para 13). Most firms review continuance before each year's engagement letter.
Who signs the acceptance form?
The engagement partner concludes on it under ISA 220 (Revised) para 22. Many firms add a second partner or the quality management lead for high-risk clients; that is firm policy, not a requirement of the standard.
Is the engagement letter part of acceptance?
It is the last step. ISA 210 requires the preconditions for an audit to be present and the terms to be agreed and recorded, normally in an engagement letter, before the audit proceeds.
Does client acceptance include KYC?
Yes, in substance. ISQM 1 asks for information on the identity and reputation of the principal owners, management and those charged with governance, and lists indications of money laundering as a factor (para A68). Anti-money laundering law in your country may add its own customer due diligence rules for accountants.
See how AuditEDMS for audit firms makes acceptance, the engagement letter and the request list happen in order: request a pilot.