Academic journal article Journal of Accountancy

Client Evaluation Checklist

Academic journal article Journal of Accountancy

Client Evaluation Checklist

Article excerpt

Formal evaluation of clients by an accounting firm often reveals whether mutual benefits are being derived from the professional relationship and determines where the major portion of client problems occur. By using an objective method to determine which clients do not measure up to firm standards, such as allocating points to responses to the categories listed below, the firm may be encouraged to take steps to correct problem areas. Generally, each client's evaluation should be done by the partner or manager with the most knowledge of, and exposure to, that client.

  Usual condition of clients
records
  2 Unusable or always late
  4 Scattered but workable
  6 Client needs orientation
  8 Good
  10 Excellent
  Clients potential growth
  5 Terminating
  10 Decreasing
  15 Level
  20 Growing
  25 Unlimited
  Clients attitude toward IRS
  1 Apprehensive
  2 Hostile
  5 Apathetic
  8 Cooperative
  Work done for client
  3 Bookkeeping
  6 Reviews or compilations
  9 Audits
  12 Yearend work, special
  15 Comprehensive services
  How client pays fees
  1 May never pay
  2 Always 90 days late
  5 Pays within 45 days
  10 Pays when billed
  Clients reaction to fees
  1 Fees always challenged
  5 Requires itemized bill
  10 Usually accepts bill
  15 Expects to pay for service
  20 Pays premium -- thinks we're
superior
  Total annual fee
  3 To $1,500
  6 $1,501-$5,000
  9 $5,001-$10,000
  12 Above $10,000
  Clients altitude toward
recommending us
  1 Would never do so
  2 Might do so
  12 Has not recently
  16 Does at times
  20 Does frequently
  What client wants from us
  1 Minimum service
  2 Security regarding IRS
  3 Counseling
  4 Timely service
  5 Direction, tax planning
  Where client seeks information
  1 Client's employees
  2 News media
  3 Client's competitors
  4 Client's friends
  5 Professionals (including us)
  Clients altitude toward
expenses
  1 Spendthrift
  2 Stingy
  3 Economical
  4 Liberal
  5 Goes "first class"
  Exposure to legal action
  1 High risk
  2 Would consider suit
  3 Low risk
  4 Little risk
  5 Would never sue
  Clients attitude toward our
staff
  1 Critical, argumentative
  2 Uncooperative
  3 Usually cooperative
  4 Businesslike
  5 Friendly, appreciative
  Clients financial strength
  1 Insolvent
  4 Solvent, undercapitalized
  8 Adequate
 10 Strong capital structure
  Above conditions prevailed as of
(month)
  Evaluation by
  Scoring:
  Maximum = 155 points
  Minimum = 23 points
  30 points and below = Drop client
  31 to 50 points = Evaluate in 90 days
(on trial)
  51 to 70 points = Make an attempt to
          upgrade client
  71 points and above = Retain client
  Total points
  Adapted from the American Institute of
CPAs Management of an Accounting
Practice Handbook. … 
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