What are the Three Types of Services CPA’s Offer

Intro

“I’ll have my accountant handle that.” You’ve probably heard this before, and for good reason.

Certified Public Accountants are versatile, highly skilled, and trained professionals that are held to American Institute of Certified Public Accountants (AICPA) standards. They must also follow a stringent code of ethics determined by the AICPA.

But what do they do, exactly? Generally speaking, most CPA services fall under three main service categories:

Audit services
Taxation Services
Advisory and Specialized

Let’s explore in in more depth below.

Audit

The purpose of audit and assurance services is to provide assurance, limited or reasonable, that financial information is materially correct. Limited assurance is based on analysis and inquiry and is provided in a financial statement review. Reasonable assurance is based on the last two items plus, inspection, verification, observation and other methods and is the basis of an audit. Neither provides absolute assurance.

The significance of an audit is that it provides assurance to lenders, clients and investors of a company. Generally, an audit is perfumed to provide reasonable assurance of the financial statements. This is under the umbrella of an external audit. Large companies also have internal audit staff. Processes are performed on a daily/weekly basis to provide internal assurance of the functions of the company.

The Firm of Ernest L. Tomkiewicz CPA PLLC (ELTCPA) provides audits to various companies ranging from start-ups to mid-size corporations. The variety of areas covered goes from crowdfunding to non-profit, to tech companies.

Tax preparation and Filing

Tax services range from simple 1040 preparation to complex tax filings for C Corporations. The clients are charged with providing all documentation needed for this service. Generally, the CPA will provide clients with a list of documents for them to gather, from there the information is uploaded to the firm’s portal for processing.

Once the return is essentially complete a client copy is sent to the client for them to review and approve. After approval the return is e-filed to federal, an as needed, state agencies.

Compliance with the tax code is mandatory and, if not done, can result in significant penalties and interest on unpaid taxes. The best advice is to get to your tax preparer early and provide them with all documentation in a timely (quick) fashion. The Internal Revenue Service has no sense of humor and does not tolerate tardiness.

Many CPA’s also provide tax advice along with filing. If your situation changes (you have a child, start/end a business, have a large increase in income) you should always contact your advisor to discuss how this will affect your tax filing. Many are the clients that do not do this. Then when tax season rolls around, they are hit with a large unexpected tax bill. This can be avoided with proper planning.

Advisory and Specialized Services

CPA’s are a wealth of information when it comes to advisory services. Financial planning, wealth management, investment advice are just a few of the services that are offered. These services can prepare you financially for the future. Whether you find a private CPA firm or a larger management company, like Edward Jones or Wells Fargo, your financial future will be better off.

With the stock market as volatile as it is, today is the best time to enlist an investment advisor. Managing your retirement account shouldn’t be left to chance, or a generic investment company. You owe it to yourself to find a certified financial planner or other professional.

Specialized services include forensic accounting, fraud prevention, and acquisition guidance. Fraud prevention is generally done prior to an incident. This is a service where the CPA will help you determine the loss points in your business. Things like proper security cameras and alarms, procedures and inventory systems are some of the areas they provide advice.

Forensic accounting is generally done after a loss, unlike fraud prevention. This entails the accountant reviewing records, documents, bank statements, etc. Once the investigation is underway, they will usually interview employees and managers to narrow the scope of the investigation. Once complete you will be issued a report of findings. In some cases, the authorities are brought in to investigate and potentially arrest a suspect.

Acquisition guidance is performed when an individual, or a business, is purchasing a business. This involves high level analysis of financial information, auditing, and verification of accounts. Making sure revenue and expenses are appropriate and confirming accounts with vendors and customers is a usual event with acquisition investigation.

Where Taxation Meets Assurance and Advisory

When it comes to advisory, tax and audit services, they are often combined in the same CPA firm. It is far easier, and more cost effective to have the tax preparation done at the same time as the audit. When it isn’t, two providers are needed, and generally the audit staff wants the tax preparation done prior to the audit work. This can save extra time as well as extra money. I’ve found that a company can save several thousand dollars when having me perform both items. This is particularly important to non-profits.

When it comes to advisory, one would expect their tax CPA to provide this service. While not all services are handled by all CPA’s, basic tax advisory should be. Often when it comes to retirement planning and investing, clients are referred to companies that have more experience in this area.

Choosing the Right CPA Service and Provider

The primary things to look for when finding a CPA are:

Knowledge of your industry. Find a CPA that has experience with what you do. Not all can handle the food industry, or manufacturing. Experience is key to success.

Who will be handling your work. Some CPA’s push work to lower-level staff and this can create a low-quality work product and repeat questions.

Find a CPA that is technology heavy. Some individuals do not like this, and that’s fine, but a business needs a CPA 2ith the latest knowledge of tech. The days of the CPA working out of their house and not using a portal are coming to an end.

What do they charge? My philosophy is to price the job at hand, so the client knows up front what they’ll be paying. Others however charge by the hour, by the form for taxes, or other hybrid methods. Be sure you are comfortable with the pricing structure.

By Ernest Tomkiewicz CPA on August 25, 2023 / Accounting / Leave a comment