Section Acceptance and Continuance of Client Rel - ASQC 1 - Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial Information, and Other Assurance Engagements - Acceptance and Continuance of Client Relationships and Specific Engagements

Acceptance and Continuance of Client RelAcceptance and Continuance of Client Relationships and Specific Engagements

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Acceptance and Continuance of Client Relationships and Specific Engagements

The firm shall establish policies and procedures for the acceptance and continuance of client relationships and specific engagements, designed to provide the firm with reasonable assurance that it will only undertake or continue relationships and engagements where the firm:
1. Is competent to perform the engagement and has the capabilities, including time and resources, to do so; (Ref: Para. A18, A23)
2. Can comply with relevant ethical requirements; and
3. Has considered the integrity of the client, and does not have information that would lead it to conclude that the client lacks integrity. (Ref: Para. A19‑A20, A23)
Such policies and procedures shall require:
1. The firm to obtain such information as it considers necessary in the circumstances before accepting an engagement with a new client, when deciding whether to continue an existing engagement, and when considering acceptance of a new engagement with an existing client. (Ref: Para. A21, A23)
2. If a potential conflict of interest is identified in accepting an engagement from a new or an existing client, the firm to determine whether it is appropriate to accept the engagement.
3. If issues have been identified, and the firm decides to accept or continue the client relationship or a specific engagement, the firm to document how the issues were resolved.
The firm shall establish policies and procedures on continuing an engagement and the client relationship, addressing the circumstances where the firm obtains information that would have caused it to decline the engagement had that information been available earlier. Such policies and procedures shall include consideration of:
1. The professional and legal responsibilities that apply to the circumstances, including whether there is a requirement for the firm to report to the person or persons who made the appointment or, in some cases, to regulatory authorities; and
2. The possibility of withdrawing from the engagement or from both the engagement and the client relationship. (Ref: Para. A22‑A23)