COMMERCIAL INVESTIGATIONS LLC recommends CLIENT BACKGROUND INVESTIGATIONS as a prudent part of prospective
and current client vetting processes. A key element to mitigation of business risk is in client acceptance and
continuation policies and procedures. These policies and procedures are designed to provide a reasonable assurance
of minimizing the possibility of association with a client whose management lacks integrity.
As an example, the integrity and reputation of a client’s management could reflect on the reliability of a CPA firm’s
financial representations and accounting records; therefore, reflecting on the CPA firm’s reputation and possible
involvement in litigation. CI’s services will assist you in identifying and rejecting prospective clients of questionable
reputation that may involve a high risk of litigation or regulatory investigation. In addition to assisting with prospective
clients, CI’s CLIENT BACKGROUND INVESTIGATIONS also assists in mitigating risks associated with existing clients. On an
annual basis (or earlier as necessitated by a significant change in management, directors, owners, legal counsel,
financial condition or nature of the client’s business) you should determine if it is prudent to update a client’s past
CLIENT BACKGROUND INVESTIGATIONS constitute good business practice and are generally expected as standard
practice and proper due diligence by CPA firms and other heavily regulated industries. CLIENT BACKGROUND
INVESTIGATIONS are important for all businesses who extend credit to customers, especially large accounts that could
harmfully effect your cash flow and the stability of your business.
There is no established precedent of what constitutes prudent CLIENT BACKGROUND INVESTIGATIONS. However, there
are many types of information available and accepted as part of an investigation that will enable you to better monitor
clients and avoid situations that could escalate into crises.
Although CI’s services are completely customizable, there are established background investigations options to choose
from. Available options include COMPANY BACKGROUND INVESTIGATIONS at the basic, moderate or ideal level and KEY
INDIVIDUAL BACKGROUND INVESTIGATIONS also at the basic, moderate or ideal level.
CI typically recommends focusing CLIENT BACKGROUND INVESTIGATIONS on issues involving financial difficulties, fraud
allegations, bankruptcies, judgments, liens, ties to organized crime or terrorist groups, securities violations, regulatory
investigations including SEC sanctions, management reputation and management performance at prior companies. You
may also consider focusing on civil and criminal litigation actions initiated by and against the client and identified key
personnel. In addition, consider performing a search of local and national media for information regarding the client and
identified key personnel.
Companies should utilize CLIENT BACKGROUND Investigations as a core basis for prudently approving prospective and
DATE: November 2005 - Client Background Investigations