A Case-Based Approach to the Evaluation of New Audit Clients

Abstract

Evaluating a potential client is an expensive undertaking. Potential clients are evaluated through extensive interviews, evaluation by in-house industry experts, and preliminary audit planning. The audit partner uses prior experience to make judgments about a prospective client. Decisions about a client have long lasting implications for the auditor and the client. Case-based reasoning is an information technology that can be applied to the evaluation process to broaden and deepen the audit partner's judgments. This paper demonstrates how case-based reasoning can improve the audit acceptance process. The inherent difficulties of new client acceptance are reviewed. An overview of case-based reasoning is provided. We then demonstrate how case-based reasoning can increase the quality of firm specific assessment when evaluating potential audit risk associated with a new client. Finally, we discuss the expected implementation impacts arising from the application of case-based reasoning.

• Case-Based Reasoning
• CBR
• Audit Engagement Acceptance
• Audit Risk Assessment
• Audit Pricing