Which client files in an accounting practice should I sample before I buy it?

A hand-picked sample shows only what the seller wants you to see. Ask instead to choose files yourself from a list, anonymized if needed. Mix large and small clients, long-standing and new ones, simple returns and complicated engagements. Include a few files with disputes, late filings or unusual circumstances, because those show how the practice behaves when things go wrong.

Look at what is in each file. Are working papers clear, signed off and consistent? Who prepared and who reviewed? Do engagement letters exist, and are fees recorded and collected? Notes about the client’s habits, such as late documents, tell you how easy the work is. Look for files where one person did everything, since that points to dependence.

Handle confidentiality carefully. Client files are private, so ask your lawyer how to see them and what the clients must be told. Sampling may be limited to summaries until you have signed the right agreements. Have your accountant or a professional colleague look at the quality of the work, since they know what good files look like. Finally, compare the sample to the practice’s own description. If the seller says most work is routine, the files should show that. If they show much more complexity, you will need more staff time than you expected.

Key takeaways

• Choose the files yourself from a full list.
• Include troubled, new, old, large and small clients.
• Check for sign-off, engagement letters and fee records.
• Settle confidentiality with your lawyer first.