Choosing a CPA
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Who needs a CPA?

If you believe that only the rich and famous need the services of a Certified Public Accountant (CPA), think again.

CPAs act as advisers to individuals, businesses, financial institutions, nonprofit organizations, and government agencies on a wide range of financial matters. Today, many individuals turn to CPAs for help with both their tax preparation and personal financial planning. Increasingly, people rely on CPAs for assistance in building college funds, planning for retirement, and creating estate plans.

Business owners and managers of various for-profit and nonprofit organizations have traditionally depended on CPAs for auditing services and advice on developing effective accounting systems, maximizing operating results, and resolving various management problems. In addition, CPAs assist businesses in designing and installing data processing and management information systems.

CPAs also serve in management at companies of all sizes. As corporate managers, they perform many of the same services that outside CPAs do (as described in this brochure). They also bring special expertise and insight to management issues, helping to reengineer company finance functions, structure transactions for the capital markets, manage employee benefit plans, and prepare and analyze financial and operational information for management decision-making. Whether chief financial officer, controller, or head of human resources, CPAs are trusted members of many successful companies' senior management teams.

If you are interested in the services that CPAs provide, this short guide can offer you some basic tips on how to choose and use a CPA.

What qualifications should I look for in a CPA?

Before you select a tax, accounting, or personal financial adviser, make sure you consider the following questions:
bulletIs the individual a certified public accountant?
bulletIs the CPA licensed to practice in your state?
bulletTo what professional organizations does the CPA belong and how active is he or she in those organizations?
bulletAre your needs compatible with the CPA's personality and expertise?

Don't underestimate the importance of the CPA designation. Remember, those three letters are awarded only to those individuals who have passed a rigorous two-day uniform national examination.

In addition, CPAs are distinguished from other accountants by stringent state licensing requirements. Most states require CPAs to have at least a college degree or its equivalent, but several also require post-graduate work.

Membership in professional organizations is also an important qualification. For example, over 330,000 CPAs belong to the American Institute of Certified Public Accountants (AICPA). All AICPA members are governed by a code of professional ethics which is among the most exacting of any profession. What's more, their firms must undergo a review of their accounting and auditing practice on a regular basis.

AICPA members also must satisfy extensive continuing education requirements. And, starting in the year 2000, new members will be required to have completed 150 semester-hours of higher education prior to joining the Institute.

Compatibility, another qualification to look for in a CPA, is harder to define but is just as important as technical proficiency. Make sure that the CPA's personality and expertise match your needs.

Keep in mind that a long-term working relationship between you and your CPA can help you take an informed, consistent approach to personal financial and business problems and may help you meet your financial goals.

What do CPAs charge?

CPAs normally base their fees on the time required to perform the services you request. There are no "fee schedules'' common to the profession. Fees depend on the type of services you require, the prevailing costs in the community, the CPA's level of expertise, and the complexity of your work.

Talk frankly with your CPA about fees. Find out how much you will pay to have work performed by a staff accountant who is under the supervision of a CPA, a higher-level employee such as a supervisor, or perhaps even a partner of the firm.

How can you get the most value from a CPA's services?

Although all CPAs meet substantially the same education, training, and licensing requirements, they do not all provide the same range of services. Therefore, when looking for a CPA, you should analyze your current and future financial needs and select someone who can address your particular concerns.

CPAs themselves have some suggestions on how you can make the best use of accounting services and get the most value for your money. Here are just a few of them:

bulletBe prepared to discuss your plans and objectives. CPAs are in the best position to advise you and serve your interests when they understand your goals.
bulletGather information about business or personal financial decisions under consideration so you can ask the CPA specific questions.
bulletClearly explain what you expect from the CPA's services.
bulletSave yourself unnecessary fees by keeping good records and not using professional time for routine work.
bulletKeep your CPA informed of changes in your personal and professional life. A recent marriage or divorce, the birth of a child, a career change, or an especially generous bonus can all have a significant impact on your tax liability and personal financial goals.

Here are just a few of the services a CPA may be able to offer you.

Services for business owners:

bulletSetting up accounting systems
bulletStructuring transactions for capital markets to meet financing needs
bulletAccumulating, analyzing, and reporting financial and operational information for management decision-making
bulletReengineering company finance functions
bulletAuditing, reviewing, and compiling financial statements
bulletManaging investments
bulletProviding management consulting services on such subjects as benefit plans, compensation plans, and data processing systems
bulletPlanning tax strategies and preparing tax returns
bulletMinimizing tax liability
bulletRepresenting you before tax authorities

Services for individuals:

bulletDeveloping a personal financial plan
bulletCreating a family budget
bulletPlanning for retirement
bulletDeveloping an estate plan
bulletAssessing insurance needs
bulletAdvising you on divorce settlements
bulletDevising saving and investment strategies
bulletHelping you build college funds
bulletPlanning tax strategies and preparing tax returns
bulletMinimizing tax liability
bulletRepresenting you before tax authorities

What does a CPA's AICPA membership mean for you?

It's important to know whether the CPA you're choosing is a member of the American Institute of Certified Public Accountants (AICPA). Membership in this national CPA professional organization is a mark of distinction. It means that the CPA you hire is acutely prepared to meet all your business and financial needs. As an AICPA member, your CPA must meet stringent professional, technical, and ethical requirements, which include:

bulletPeer review: Members in public practice are subject to rigorous peer review of their accounting and auditing practice on a regular basis.
bulletContinuing Professional Education: Members are required to take courses that keep them current on all facets of accounting theory and practice.
bulletCode of ethics: The AICPA has established a professional code of ethics and holds members to its strict standard of practice and behavior. Any breach of this code will result in censure by the AICPA ethics committee and possible license revocation by state boards of accountancy.
bulletInformation resources: The AICPA publishes numerous technical publications and professional periodicals and offers the most comprehensive accounting library in the United States, a technical information hotline, topical conferences, and the reports and publications of AICPA committees, which are comprised of preeminent CPAs from around the country.