Risky Client | AccountingWEB

Risky Client

I have recently taken on a new client. We had a meeting, went through everything required, taken copies of ID from him and everything seemed above board so we both signed a letter of engagement and I was happy to act for him. He said that he only wanted a P&L account doing for insurance purposes.  However when I went through his information in more depth, I noticed there was something not quite right. So, curiously I 'Googled' his name and it came up that he been recently sentenced for fraud by overstating claims for work he hadn't carried out and had been doing so for some time. It also seems that he used an accountant up until he was sentenced. I am awaiting reply from his former accountant.  My question to all is, once a letter of engagement has been signed, can I still reject this client? and am I right not to act for this client?  Thanks

davidwinch's picture

Can I ask . . .

davidwinch | | Permalink

Can I ask why you don't wish to act for this client?

OK, it's a silly question!  But my point is that, in putting into words your reasons for not wanting to go ahead, you will also be thinking about what you are going to say (or preferably write) to him to explain that you have changed your mind.

It seems to me that the client was not 'up front' with you about his past, both in regard to his criminal record and his use of a previous accountant.  You now have doubts about his honesty and integrity - because of his past and his lack of openness with you.

The relationship of mutual trust which you require is no longer there.

I certainly think that you must now tell him you will not be acting for him (and I think you have to write off any time you have spent).

I assume your engagement letter doesn't say anything about terminating the relationship (perhaps you might want to think about including something in future) but it must be the case that the relationship can be terminated either by the client or yourself on sensible terms.  In these circumstances it seems to me that you 'owe' nothing to the client and he owes nothing to you.

So just tell him it's over because the relationship has been irreparably damaged, and goodbye!


Risky Client

m_joseph1983 | | Permalink

Thank you for your advice and guidance. It's very much appreciated and a massive help.



I am sure

pauljohnston | | Permalink

you have a letter of disengagement.  I would recommend that you send this to him by special delivery if you dont want to visit along with any original docs (keeping copies just in case).


If you dont have such a letter create one (search on accountingweb for help)


Anonymous | | Permalink

Nobody likes to loose a client, but I think in this case it will be good for your business.

Go for it! It can be quite empowering.

This is not the sort of client you want anyway.

...and the anti money laundering angle?

Anonymous | | Permalink

I work in an offshore centre which is frequently criticized for facilitating crime and every other offence under the sun!  What interested me in the response given was that there was no consideration as to whether there was any need to report this client/prospective client under the UK AML regime. 

Of course, much depends on whether there is a suspicion that the accounting provision would be used for nefarious purposes, but in this jurisdiction (and despite the popular impression to the contrary) in such circumstances the anti money laundering aspects are to the fore!


anti money laundering angle reply

Anonymous | | Permalink

There would appear no suspicion of a crime to report, unless once a criminal always a criminal.

The reason for non acceptance/resignation of the appointment is professional one.

Our professional rules always did deal with these matters, not that any one read them except for me.

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Group: Money laundering and crime
A group for discussing issues relating to suspected money laundering and other crime