Using Technology to Reduce Firm Risk Exposure and Improve Outcomes for Accounting Firms
When an accounting firm considers new business, it must perform an evaluation of the client’s potential impact on the firm’s overall risk exposure. Instead of relying on email exchanges and manually updated spreadsheets, firms can use technology to build and then integrate their risk assessment workflows with their own data repositories as well as external commercial resources, searching against internal and third-party data to surface, analyze, and assess critical information about the potential client before making client acceptance and continuance decisions. Manual risk assessment is arduous, time-consuming, and error-prone, and can lead to an increase in firm risk. Increasingly, firms ensure a robust client risk management process using a technology solution — like OnePlace Risk & Compliance — that offers integrations between firm systems and third-party data providers to surface client information and verify data accuracy.
Evaluate Complex Client Risk
Once your firm has verified the entity’s preliminary risk-related information — including its correct legal name, corporate group, and other key data — the firm risk assessment process can expand to evaluate the entity’s area of business, credit risk, presence on sanctions lists, and other factors the firm deems important when evaluating new business pursuits. The right technology solution helps your firm establish its appetite for risk, evaluate relevant risk-related metrics, and ultimately assign a risk assessment score to each entity and new piece of business based on your firm’s defined risk profile.
OnePlace Risk & Compliance can help your firm establish client risk management procedures and processes, building a full picture of your clients’ risk profiles to help make informed, risk-based business acceptance decisions.
Adapt to Changing Firm Risk Factors
It’s important for accounting firms to establish an automated method for running independence checks, using the client’s name and corporate tree affiliates as search terms against the firm’s current business and pipeline prospects. OnePlace Risk & Compliance can help manage this process, considering both current business as well as high-value potential future business.
To help balance your overall firm risk exposure levels, it’s important to manage compliance throughout the client engagement lifecycle, helping to evaluate client and engagement risk not just as a point-in-time process but continuously throughout the entire engagement. Although all firms perform client acceptance and continuance processes, forward-looking firms ensure that they monitor client risk, kicking off workflows and issuing notifications when risk thresholds are triggered.
For example, a client could clear the initial acceptance process but, 6 months later, the entity name appears on a government watch list. Your software should include a monitoring tool that notifies the right group at your firm of this new event — which could affect your firm risk exposure — and kick off a new risk assessment process incorporating the triggering event.
Understand Your Firm’s Risk Tolerance
It’s important for you to establish the level of firm risk exposure you’re willing to accept with every new client and new engagement, using a process that incorporates risk metrics that firm leaders have assessed to be most important.
In evaluating new business, your firm must have a way to consistently ask comprehensive questions, then trigger relevant workflows and processes based on the answers. The best practice is to establish a firm risk assessment process that minimizes manual input, thereby reducing opportunity for human error.
OnePlace Risk & Compliance helps your accounting firm maintain risk consistency across service lines, industries, and geographies. Providing an established, automated firm risk exposure process minimizes human error while promoting consistent, informed decisions that move your business forward.
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