Accept or Reject: How to Identify and Respond to High-Risk Clients
These four tips can help CPA firms keep troublesome clients away this busy season.
By Deborah K. Rood, CPA, MST | Digital Exclusive – 2026
Be mindful of the company you keep. This advice is especially important for certified public accounting (CPA) firms during tax season when busy season pressures can make it harder to spot high-risk clients.
Understanding the client risks that you allow into your firm and managing and monitoring them once they’re there is incredibly effective in mitigating the risk of a future malpractice claim. As you prepare for busy season, consider these four tips to help you identify and proactively respond to potentially troublesome clients.
1. Identify Clients Who May Have Implemented Aggressive Tax Planning Strategies
Consider whether these clients still fit the firm’s ideal client profile. Aggressive strategies might include any identified on the IRS’ annual “Dirty Dozen” list, sovereign tribal tax credits, syndicated conservation easements, and other “too-good-to-be-true” strategies or tax benefits that haven’t yet been identified by the IRS.
Once these clients have been identified, determine whether the firm will continue to provide services to them. Remember, aggressive clients may blame their CPA if anticipated tax consequences aren’t realized, so make sure to document research performed and related client discussions, including client acceptance of such risks if appropriate.
2. Revisit Last Season’s Client List
Are there clients that have proven to be difficult to work with? Before busy season gets too busy, it’s a good practice to identify any clients who may present heightened professional liability risks this season. Clients that increase risk include those who:
- Don’t provide enough time to prepare tax returns.
- Are quick to blame others, including the CPA, if there’s a problem.
- Are chronically nonresponsive.
- Routinely create re-work.
- Consistently argue over bills.
- Have trouble paying bills on time.
If you’re on the fence in continuing your relationship with a client, a good rule of thumb is comparing these clients to the firm’s “ideal client profile” as part of the client continuance process. If a client is a habitually late payer, consider requiring a retainer and instituting proactive collections management to help stay in the black.
If the decision is made to terminate the client, confirm this action in a letter to the client to avoid future ambiguity regarding the status of the relationship. Even if you decide to inform the client of your resignation verbally, a follow-up letter is suggested.
3. Identify Clients That May Create Potential Conflicts of Interest
Juries may not understand the intricacies of tax law, but they can recognize when it appears that the CPA favors the spouse with a greater share of the income in a divorce or the owner with a greater percentage of the business in a dispute. Stay alert for potential or actual conflicts of interest, either based on the AICPA Code of Professional Conduct or Treasury Department Circular No. 230, and establish protocols to address potential conflicts that may arise during the engagement.
4. Review How the Firm Conducts Due Diligence on Prospective Clients
Not engaging with a problematic prospect stops a risk from entering the firm. So, how can you identify potential problem clients before bringing them onboard? Consider these steps:
- Conduct an internet search on the prospect.
- When researching, determine if the prospective client creates a potential conflict of interest with an existing client.
- Ask the prospective client why they’re changing accountants. Depending on the information you gather about the prospect, request the prospect’s consent to contact the predecessor accountant.
- Consider obtaining a retainer from new clients as a condition of engagement.
Ultimately, clients can affect staff morale, profitability, and professional liability risk. Therefore, it’s essential that CPA firms carefully select new clients and perform ongoing evaluations of their existing clients to help safeguard their firm’s reputation and long-term success.
Deborah K. Rood, CPA, MST, is a risk control consulting director at CNA and a former chairperson of the Illinois CPA Society. The purpose of this article is to provide information, rather than advice or opinion. It is accurate to the best of the author’s knowledge as of the date of the article. Accordingly, this article should not be viewed as a substitute for the guidance and recommendations of a retained professional. In addition, CNA does not endorse any coverages, systems, processes or protocols addressed herein unless they are produced or created by CNA.
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