When I was in public practice, I audited both small and large entities, in both the public and private markets. Regardless of the client’s size or its stakeholders, the success of an audit depends on the dedicated efforts of numerous professionals. One or two people may oversee an engagement and chart its course, but its ultimate quality reflects each individual’s contribution and how well the team pulls together to maintain high standards. In essence, everyone has to step up to make sure the team succeeds.
The AICPA recently launched its own team effort: the Enhancing Audit Quality initiative. AICPA President and CEO Barry Melancon describes in his recent blog post how this comprehensive, integrated effort is looking at every area that impacts the quality of private entity financial statement audits. (When we talk about private entities, we are referring to all non-SEC registrants, including not-for-profit organizations, employee benefit plans and governmental entities.)
Whether you’re new to tax season or an experienced pro, there were probably times in the months leading up to April 15that brought new meaning to the term “multi-tasking.” Helping clients sift through back-up material, preparing and filing returns and keeping abreast of tax news, is an all-consuming process. Yet, tax season is also a time when you can easily overlook opportunities to improve your practice, strengthen client relationships and foster your professional development.
With April 15 comfortably behind you, now is the perfect time to look back and identify opportunities that can help grow your practice or help manage your staff. Here are five AICPA resources you might have kept on the back burner while you were in the throes of tax season.
I continue to get requests from members on how to handle the "comfort letter" issue, as well as feedback on guidance the AICPA has developed and suggestions for how we can better advocate for our members and their clients. By way of background for those of you who may have missed my previous blog post, CPAs are often asked to verify a variety of client information for regulators, banks, insurance providers, state taxing authorities and more.
What they're asking for, basically, is a guarantee that certain information about a client is correct, such as confirmation of a client’s self-employment status; verification of income from self-employment; verification of a self-employed borrower’s business ownership percentage; and profitability or sustainability of a self-employed client’s business. While it's certainly understandable why they would want verification of this information, depending on what the request is can place CPAs in a risky situation. At the AICPA, we’ve received several inquiries from members regarding what is often referred to as "providing comfort" or “comfort letters.” However, the requests are actually “third-party verifications."
Every few years, the issue of providing clients with comfort letters – or verification documents – rears its head among our members. Regulators or banks often look for verification that certain items within a financial statement (e.g., revenue) or a tax return (e.g., income) is "right" and they want a CPA to verify it. AICPA members have even received requests for comfort letters from adoption agencies, health insurance providers and state taxing authorities.
According to the AICPA’s Professional Liability Insurance Program, examples of third party verification information requested by lenders and loan brokers include:
I’m a sports fan. And I’m the mother of two athletic teenage boys. I’ve watched a lot of ball games over the years, and I’d like to think I’ve learned a little bit about coaching. Recently, I watched a basketball game where the home team lost, but should have won.
Why do I think they lost? Coaching.
Despite the team’s collective talent, the coach allowed selfish play and poor execution without consequence. More importantly, he failed to adjust his strategies to counter the opposing team's strengths. Occasionally, talent alone suffices in order to win a game. Most times, however, how that talent is deployed makes the difference between success and failure.
As CPAs, we are increasingly called upon to use our professional judgment in facing key auditing, tax and accounting concerns – especially as the profession moves from being rules-based to more principles-based. We gain our ability to apply professional judgment over time, through experience, training and an understanding of what a reasonable person would perceive as the right course of action under certain circumstances. We are informed by our upbringing, by the guidance of our mentors and colleagues, and during interactions with our employers and clients.
At some point during our careers our professional judgment is likely to be tested.
Last month, I had the pleasure of attending the very first Women’s Global Leadership Summit, organized by the AICPA Women’s Initiatives Executive Committee, along with sponsors AICPA Private Companies Practice Section, the American Woman's Society of Certified Public Accountants and the Canadian Institute of Chartered Accountants. What an inspiring experience with a group of accomplished, empowered women. Women from all areas of accounting gathered to talk about the business case for creating inroads for women leaders in the profession, best practices for onboarding, preparing and maintaining female leadership and the effectiveness of establishing mentorship and advocacy programs.
I know many of my peers are striving to stay ahead of the complexities of the profession, build a solid reputation and balance work and family in an increasingly challenging environment. I came out of the Summit feeling energized that more women are assuming leadership roles in accounting. I thought: “What advice do I wish I had heard from my peers and role models when I was just starting out in the profession?”
Here’s what came to mind:
Have you seen the CGMA Report “Thirsty Planet”? The report expertly underscores the need for businesses to consider social and environmental sustainability as a means to sustain business. Ensuring that natural resources, such as water, are safe and clean for future generations, communities and businesses to come should be a priority for businesses.
A sustainable enterprise has a clear strategy not only on how it will make money, but also on its social and environmental impact. An organization’s ability to create and preserve value for itself, its stakeholders and society at large, depends on the strength of its business model; the sustainability of the financial, social, economic and environmental systems within which it operates; as well as on the quality of its relationships with, and assessments and decisions by, its stakeholders. Businesses need to consider environmental and social impacts in order to have a genuinely sustainable business that makes money—not just because it is the right thing to do, but also because it makes good business sense.
It’s valuable to have a perspective on the current state of firms, no matter your role in the CPA profession. Knowing the existing best practices in areas such as staffing, training and technology is important. The 2012 PCPS/TSCPA National MAP Survey, which is being fielded now through July 20, provides you the opportunity to expand your knowledge base on these hot topics. This comprehensive look at CPA firms’ key strategic data is the largest firm practice management survey project of its kind. Contribute your answers to the survey and you’ll have access to the results when complete.
A unique benchmarking tool, the PCPS/TSCPA National MAP Survey reveals key performance indicators broken down by firm size and region so that it’s possible to make meaningful comparisons among firms. It also assesses how firms are doing and spots emerging trends.