When Is an Auditor Considered a "Rainmaker," and How Is

question 38

Essay

When is an auditor considered a "rainmaker," and how is this label applicable to the client acceptance decision?

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Definitions:

Contingent Liability

A potential financial obligation that may arise in the future, dependent on the occurrence of certain events.

Liability

An obligation arising from past transactions or events, which may result in an outflow of resources embodying economic benefits.

Provision

An amount set aside in the accounts to cover a probable future expense or liability, recognized for known obligations of uncertain timing or amount.

Onerous Contract

A contract where the unavoidable costs of meeting the obligations exceed the economic benefits expected to be received from it.