Play Ball - Using The Resources Of A CPA
I always smile when around April 15, folks find out that I’m a CPA. They say, “Wow, you must be really busy right now!” They are surprised or confused when I calmly reply, “Actually, no.” They grow curious when I further explain that I know hardly anything about personal taxes except my own. Even then, the computer software does most of the work for me. Their next question should be, “Well, then what do you do as a CPA?” Most never ask, unfortunately, because what I do and what a CPA can do is likely worthwhile to your nonprofit organization. If you are part of a nonprofit, here is a short list of thoughts and tips for you to consider the next time you need, or are wondering if you need, the resources of a Certified Public Accountant, or CPA.
First, CPAs specialize. Every CPA has expertise in some, but not all, areas of accounting, which for me means I know a lot about a little and a little about a lot. I recommend you first learn what your CPA really knows a lot about, so you can direct your next questions properly. In other words, if you work for a nonprofit organization, you want to be sure your CPA specializes in nonprofit accounting.
But specialization doesn’t stop there. Within nonprofit accounting there are numerous subcategories: churches, health and wealth fare organizations, foundations, associations and more. Moreover, there are various areas of accounting and finance: financial reporting, internal controls, taxes, startup activities, capital campaigns, monthly bookkeeping, pastor payroll accounting and many more. This is why you will often see individual CPAs form a CPA firm, because a firm brings many CPAs together with various expertise in order to offer a full line of services to you and your organization. It’s simply not possible for one CPA to know everything about everything. So be cautious: if you work for a church, you want to inquire about a CPA or CPA firm who really knows church accounting, not just nonprofit accounting.
Next, once you find the right type of CPA, consider their various service options in relation to the needs of your organization. Most CPA firms can provide, at a minimum, the following services:
• Financial audits and reviews
• Compilations or financial statement preparation
• Examinations of specific subject matters
• Tax preparation for 990 and 990-T
• Consulting or advisory services
Before you pick a service, you need to understand an important point. A CPA’s greatest value to the client is their independence, closely followed by technical skills. A CPA is to a business what a referee is to a game: the referee doesn’t participate in the game, but you’re glad he is atching to make sure the game is played properly (according to the game rules) and fairly (without bias).
While we don’t always agree with the referee’s decision, we trust that decision implicitly. A similar level of trust is expected of CPAs. Here comes an important point: did you know that independence, that most vital of your CPA’s services, is only required for a few of the services I listed above? A CPA must only be independent for attestation services: financial audits, reviews and examinations. A CPA may be independent for other services but must be independent for attestations. Why is this important? Independent services are often required by your organization’s board or by-laws or by a third party who is vetting your organization. For example, banks usually want an annual audit or review of your organization if they are financing your organization’s debt. You may be surprised to learn that a tax preparer— one who prepares your 990 or 990-T—does not have to be independent. Perhaps even more surprising is a tax preparer does not even have to be a CPA. So, consider whether you really need an independent service like an audit. Be careful if you use a non-CPA that they can validate their competency in some other way. Also, recognize that a non-CPA can never perform (and should never offer to perform) a true financial audit.
Probably the most underutilized CPA service is consulting. In my firm’s practice, many organizations default to requesting audit and review services. This makes sense: audits are comprehensive and respected around the country as the highest level of service a CPA can perform. However, if an organization is not required to have an audit or review, they might be better serviced by a CPA’s consulting services. The beauty of consulting is that it can be tailored to your specific needs. For example, many organizations simply want to know that they are “doing it right.” They don’t need a full financial audit. They don’t even need financial statements
(and certainly not disclosures!) They are really just concerned about basic day-to-day, month-to-month operations such as payroll, contributions processing and disbursements processing. Are we handling the money properly? Is there anything we could do better, more efficiently, more
effectively? How do we compare with other organizations like ourselves? Are we following best practices? A CPA can help answer these questions by tailoring a unique consulting engagement to you. Furthermore, a consulting engagement may be cheaper for your budget than an audit. While the average hourly rate for consulting should be higher, the overall cost should be less than a full audit.
Finally, recognize there are times when you need someone other than your long-trusted CPA.
I’m happy that many of our clients think of us first and call when they have an accounting, finance or compliance question. But a seemingly simple question can quickly cross over into a complex regulatory and legal matter. In that case, they don’t need a CPA as much as they need an attorney (or better, a CPA who is an attorney). Perhaps they simply need a different CPA firm with another area of expertise. The good news is that your CPA’s professional network overlaps with other CPAs, as well as with attorneys who specialize in serving organizations like yours. So, don’t be afraid to ask your CPA for referrals. Your CPA should be able to provide you with references for other CPAs, attorneys or experts in your community who specialize in your most pressing or complex needs. CPAs offer a variety of resources and expertise to support your frontline ministry. God bless you as you find the CPA service—among many good options—that is most valuable and timely for your organization!
- Ashely Voss
(Originally published AUG 2019 Magazine)