This article was published in the "Martinelli Newspapers" in the March 9, 2006 weekly issue of The Westchester Crusader, The Rye Chronicle, The Eastchester Record, The Pelham Sun, The Sound View News Home News & Times, The Mt. Vernon Independent, Harrison Independent
and North Castle News

Life and Money - Choosing the Right CPA - Part 2

By Frank Sisco, CPA, PFS

(Word count =  1,282 including 73 words for About the Author)

Introduction

This week's column completes the discussion choosing the right Certified Public Accountant for you or your business.  Last week's column covered  (a) the varying types of CPA expertise and how to find good candidates who fit your particular needs (b) the reasons why the decision can be very important to your financial health and (c) twelve key traits a CPA should possess. Please bear in mind that the facets of choosing a CPA to help you with this year's tax return or advise you on a specific financial planning matter are very different than if you run a large multinational company and need the extensive resources and expertise of a major CPA firm.  Yet, your decision of the CPA, or CPA firm, boils down to sizing up the people, and whether they match what you need.  Here are the thirteen questions I hope you find to be helpful in the process of choosing the right one

1. Have you helped a client in a similar situation?

It saves time to work with a CPA who has already dealt with similar situations. Probe to discover exactly how she or he has dealt with problems similar to yours.

2. Will my company and/or I be serviced by you, a partner or by junior accountants?

Many CPA firms train new associates at the client’s expense. Be sure that you get what you pay for.

3. What are the nature, scope, and timing of your work, and what will it cost me?

Often, a CPA’s work plan can be more extensive and more expensive than you might expect. Get the accountant to be specific about what he or she will do, and get a detailed written letter and cost estimate.

4. How are your fees calculated? Will you be charging me for every phone discussion?

In order to avoid friction later, it is essential to discuss the CPA’s fee structure. If the CPA uses a time-based system, discuss the hourly rate of the accountant and staff, overhead expense reimbursement (what is the cost of a fax?) and whether certain time is not billed. Discuss alternatives such as value billing, which could base the fees on a percentage of certain value realized from creating and helping to implement strategies (e.g. cost reductions from restructuring operations; the present value of estate taxes saved).

5. Can you give me two or three quick ideas on how you might be able to save our company money or save money for me personally?

A good CPA should have sharp business acumen and be creative. A question like this can show whether the CPA can call on his or her many skills to truly help your business to increase profits, improve productivity, trim costs, enhance return, and lower taxes; or in a personal planning context to achieve financial goals, partly through enhanced investment returns, lowered taxes, reduced costs, and coordinated and simplified budgeting and planning.

6. Can you tell me a little about your practice, and your success and failures?

Open-ended questions can elicit a wealth of information. Let the CPA talk. You will also learn a lot about the CPA’s priorities, risk-tolerance levels, and various personality characteristics, all of which can be helpful in gauging compatibility.

7. What can I do to help you with your work and keep your fees to a minimum?

A great deal of your accountant’s time can be saved by preparing information beforehand. Find out if your CPA is willing to work with you to offload this work to your firm.

8. How will you be communicating the results of your work to me?

The results of an audit usually take the form of an audit report, and tax return preparation yields tax returns. But this work also can lead (and should lead) to many suggestions by the CPA on how to cut taxes, increase income, restructure investments, build business, and improve information. Some CPAs are more comfortable with interactive discussions and others prefer written action reports. In addition, specialists such as Personal Financial Specialists should be able to provide you with financial planning memos and reports in order to organize the many ideas on improving your financial health. Ask to see examples.

9. Do you perceive any conflicts of interests?

CPAs work for dozens of firms and scores and sometimes hundreds of individuals. You should inquire if any of your direct competition is represented by the firm. If so, inquire as to how this conflict is handled.  Ask about policies on confidentiality and privacy, and any cases of breaches.

10. How long have you been a Certified Public Accountant, and what other licenses do you hold?

Ask direct questions about past mistakes, current claims or litigation, potential issues, etc.  Try to uncover skeletons early in the process.  You should inquire with the state CPA organization to discover if there have been any disciplinary actions entered. Some accountants also have credentials as financial planners (PFS), securities representatives, business valuation experts, even lawyers. Check web directories and websites (e.g.  CPAdirectory.com).  Do an internet search (e.g. Google, Yahoo, MSN) to uncover information, both positive and negative.

11. Will you need to overhaul our current system ?  How well have you integrated computers and the internet into your practice, and has it enabled you to do more for clients at less cost?

Your internal bookkeeping and cost-accounting systems are expensive to alter. Find out upfront whether and how you can integrate with the firm’s systems.  Integrating your computer files with those of your CPA’s files can save time and money, and increase accuracy. Doing so over the internet makes it even simpler. Find out how your CPA uses the internet. Does she have her own website, and if so check it out and ask questions about the resources available on it. Find out how you can interact with her and her computer systems to make work flow more efficiently and enable you both to stay in better touch.  What safeguarding measures are taken.

12. Are you conservative or aggressive in interpreting tax laws and regulations, and accounting and auditing standards?

Save yourself the hassle and be certain that your accountant approaches your books in the same way you would.  Ask about falls from grace within their firm and among colleagues, and their opinions about trustiworthiness and methods they use to foster integrity and honesty among partners and staff.

13. What do you want out of life for you and your family?

This is one many questions that will give you a confirming opinion about the CPA candidate.  One strategy I suggest is to take the CPA to a two-hour dinner, and spend most of the time talking about your lives, the personal sides of life, not the business side.  Be asked and ask questions about your and the CPA's hopes, failures and lessons, disappointments and shining moments, hobbies, parents and children and siblings, the effect of grandparents and heroes, the impacts of recent deaths and tragedies, views about world problems, current life struggles, faith in God or other spirituality, and so on.  You will then know if the person across the table is the CPA right for you. If so, raise a glass to toast a very important new  relationship!

About the author.

Frank Sisco is a CPA and Personal Financial Specialist, and author of several articles about personal finance and issues of life and money.   His firm, Financial Management Corporation, is located in Harrison, NY.  Frank makes his home with his wife and daughter in New Rochelle, NY.  He can be reached at 914.381.3737 or by email at ideasmoney@aol.com, or visit his website at www.LifeAndMoney.com which contains this and prior articles.