Client Acceptance and Continuation in Independent Reviews

27 Aug

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Independent reviews are often described as “lighter” than audits, but any practitioner who has navigated the process knows that there is nothing light about the responsibility. Before any reviewer issues a conclusion, there is a critical step that determines the quality of the work that follows: deciding whether to take on the client in the first place, or whether to continue with an existing one. This stage—client acceptance and continuation—sits firmly within the planning phase of an independent review, and it demands as much professional care as the procedures that come after it.

Why client acceptance matters

The decision to accept or retain a client is not administrative. It is a professional judgement grounded in ethics, risk, and compliance. ISRE 2400 (Revised) is clear: the independent reviewer must accept or continue only when the preconditions for the engagement are present. That means ensuring that management understands and acknowledges its responsibilities, that the chosen financial reporting framework is acceptable, and that there are no threats to independence that cannot be addressed.

Accepting a client too readily exposes the practitioner to reputational and legal risks. For example, a company that refuses to provide access to key records, or whose management has a history of disregarding statutory requirements, may compromise the reviewer’s ability to obtain limited assurance. In such cases, the most professional decision may be to decline the engagement.

Preconditions under ISRE 2400

Before signing an engagement letter, the reviewer must confirm that management:

Acknowledges its responsibility for preparing financial statements in accordance with an appropriate framework.
Will provide access to all records, documentation, and information relevant to the review.
Accepts its responsibility for internal control and for preventing fraud and error.

Equally, the practitioner must be satisfied that the financial reporting framework is suitable in the circumstances. For South African SMEs, this typically means IFRS for SMEs, although in some cases other frameworks may be appropriate. Without these preconditions, the engagement should not proceed.

Assessing client integrity and risk

Beyond the formal requirements, practitioners must consider the integrity of the prospective client. This is where professional scepticism plays its first role. Has the entity complied with the Companies Act and other regulatory requirements? Is there evidence of disputes with regulators or creditors? Does management demonstrate honesty and transparency during initial discussions?

These questions are not box-ticking exercises; they are indicators of the environment in which the reviewer will work. CIBA members are reminded that their role extends beyond compliance, they safeguard the credibility of financial reporting in the SME sector.

Continuation of existing clients

Continuation procedures are equally important. Each year, before re-engaging, the practitioner should evaluate whether circumstances have changed. A client that was once suitable may no longer be so. Consider whether:

There are new conflicts of interest or threats to independence.
Management has honoured prior commitments to provide information and cooperate.
The entity’s business model or reporting framework has shifted in ways that affect the engagement.

If significant concerns arise, continuation should not be automatic. A candid conversation with management, backed by documented reasoning, may lead either to renegotiating the terms or declining further involvement.

Practical considerations for CIBA members

For practitioners in small and medium-sized firms, client acceptance and continuation can feel like lost time, hours spent before fees are even billed. In reality, this stage saves time and protects the practice. Engaging the wrong client often leads to disputes, scope limitations, and damaged professional credibility. By applying ISRE 2400 rigorously, practitioners protect both themselves and the public interest.

From a marketing perspective, a well-documented acceptance and continuation process also strengthens your practice. It demonstrates professionalism, builds trust with clients who value transparency, and positions you as more than a compliance provider—you are a trusted advisor who applies ethical judgement at every stage.

Conclusion

Independent reviews begin long before the first analytical procedure or enquiry. They begin with the decision to accept or retain a client. By adhering to ISRE 2400’s requirements on preconditions, assessing management integrity, and reviewing continuation annually, practitioners lay the foundation for engagements that are both efficient and credible. For CIBA members, this is not just technical compliance; it is the hallmark of professional excellence.

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