Choosing a Firm

By Lisa Hooker
From the September 2012 issue of Columbus CEO
  • Courtesy the Ohio Society of CPAs

Certified public accountants are among the professionals that businesses rely on in good times and bad. They perform audits and handle taxes, but also may provide counsel on strategic issues.

“CPAs are advisors in the center of important conversations. Business owners turn to their accountant for advice on growth, identifying competitive factors and succession planning. They also help companies through difficult patches, like the last few years of the recession,” says Clarke Price, president and CEO of the Ohio Society of CPAs (OSCPA).

Given the important role that accountants play, business leaders should ensure they’re engaging the right firm for both current and future needs. For a new business, it means finding a partner that can help the company grow. For existing businesses, that may mean parting company with their current provider. Any number of factors can drive such a decision.

“Very often they’ve outgrown the skills of the existing firm. Maybe they’re entering a new line of business or need different expertise. Or they feel they’ve found a firm who can do a better job at a better price,” Price says.

“They’re often looking for a particular type of expertise and a broader scope of service,” says Paul Lacroix, a partner at Deloitte who leads the audit and enterprise risk services practice in Columbus.

“The firm’s projection may have been off or the timeliness wasn’t there. Maybe the billing isn’t clear or is incorrect, so they owed money they didn’t expect,” says CPA Andrew Coen, chairman of the board and vice president of business development at Norman, Jones, Enlow & Company. “Businesses also change accountants when the CFO or comptroller changes, so it’s their team—not the former guy’s team.”

Whatever the reason, there’s a lot to consider if it’s time to shop for an accounting firm. How should executives undertake the search process? What questions help to ensure a successful relationship? Area accountants offer suggestions that can help make your company’s decision the right one.

The Search Process

A formal process rather than a haphazard approach will make any search more successful.

“Start by asking your colleagues and get referrals from within your industry and trade associations. We’re active in the relevant associations where we have specific expertise, so companies would find us there,” says Mark Van Benschoten, a CPA and principal in the audit division of Rea & Associates.

“If your current clients are happy, they can be your best salespeople among their friends and peers,” Lacroix says.

“Banks and other advisors may not give a specific referral, but usually offer the names of several accounting firms they feel would be beneficial for their customers to consider,” Coen says.

Ever-changing accounting laws and rules make it challenging to know who to turn to for which function—particularly for small and medium-size companies. “Public companies must use different firms for tax and for audit. Private companies can use the same firm for both functions, even though some choose to use different firms,” says Bill Petrus, CPA and managing partner of the Columbus office of McGladrey.

Accounting firms generally are categorized as national, regional or local. Consider each candidate’s reputation, geographic presence, technical capabilities and industry focus. If your company deals in nanotechnology, think twice about retaining a firm that specializes in public school finance.

“Providing a quality product is important, but your accounting firm needs more than core competencies. It needs a level of understanding of your business. Do they have clients who do what your company does? Look for a firm that does, so you aren’t their on-the-job-training project,” Price advises.

Businesses should determine what services they need and why. “If a client doesn’t know exactly what they need, it’s the job of the firm to help them determine that. What’s important to the business? What’s their growth plan? What differentiates them? All of those are important questions. Let the client talk to get ideas about what their successes and their trouble spots are,” Petrus says.

Large companies may be more inclined to look at the capabilities of large accounting practices. “A larger firm will probably better understand that environment. The issues surrounding a company with $100 million in revenue are different than those of a $1 million company. The ability to serve that type of client is based on the volume of activity and more complex accounts,” Petrus says.

Some businesses change firms only for certain functions. “It used to be 10 or 20 years ago a business had one accounting firm. Now it’s not unusual for us to be one of several accounting firms working with a client. That may turn into a full-service relationship or not,” says Darci Congrove, CPA and managing director of the Columbus office of GBQ.

Companies should be aware that when they’re sitting across the desk interviewing firms, they’re also being assessed as potential new clients. “The tax accounting and audit rules we follow are the same as for anyone else. We engage in conversation to find out why they’re looking to leave their current firm and would we be a good fit,” Van Benschoten says. “Have they chatted with their old firm about their pain point? People are very loyal to their professional service providers. Will they really leave the firm or are they just shopping?”

Building Relationships

Smart business owners always ask who would be assigned to their account if they retain a particular firm.

“Who will I be working with? Who’s the partner in charge? Who are the team members and what are their qualifications?” Price says. “And just as importantly, do I like them and am I comfortable with them?”

“Sometimes a firm will send an experienced partner to the company to sell the firm, but then that person disappears when the work begins,” Congrove says. “More and more companies are asking to interview the people who will be on their team without the partner present. They want to see if the team members are confident and competent on their own.”

Client surveys are common, so ask if the firm offers an official vehicle for feedback. “Feedback is the last part of the service equation,” Lacroix says. “We want to know when clients are unhappy. Then we can make the necessary corrections. Is it technical expertise, quality or timeliness that needs our attention?”

Most accounting firms make it a point to see clients more than just during tax season. “It’s not as if we meet with clients only once a year. We meet with them regularly and seek their input and feedback regularly,” says Michael Voinovich, CPA and managing director of SS&G Financial’s Columbus office.

The American Institute of Certified Public Accountants (AICPA) administers an independent peer review program in conjunction with the OSCPA and the Accountancy Board of Ohio. Depending on the type of accounting services a firm engages in, peer review may or may not be mandatory. More than 30,000 firms are required to have an AICPA review of accounting and auditing practice at least once every three years. Peer review files are posted publicly at www.aicpa.org. “I’d look at the peer review, because I’d want to know what independent accountants thought of the firm before I signed on,” Voinovich says.

As sterile as numbers can be, accounting is a relationship business. “I often say we’re not in the audit, tax or consulting business, we’re in the trust business. People trust us with important aspects of their company. It’s up to us to bring the best people to the table to assist them,” Lacroix says.

“A successful accountant-client relationship is synergistic. It’s necessary to find the right fit not only with a firm, but with the people within the firm that you work with. The CPA designation gives you a knowledge base, but trust is important, too,” Voinovich says.

The relationship encompasses more than comfort. “As I learn about their business and personal priorities through the years, the better accountant I can be. That all comes out in the course of working together day-to-day,” Congrove says.

Niches and Professional Designations

A full-service accounting firm can address the whole complement of accounting services that a business needs.

“The accounting industry has expanded so much that we’ve tried to set up a one-stop shop for our clients. They can choose from the core and ancillary services their business needs at the time or as they need them in the future,” Voinovich says.

“They may not be aware of what’s coming, because they’re so busy running the office,” Petrus says. “We can ensure their infrastructure can accommodate their growth. We also can address IT, finance, human resources and other functions they may not think that an accountant can help with.”

Many accounting firms tout their expertise in certain industries. Their experts are a helpful resource, because they offer clients a depth of experience beyond general awareness.

“With our broad range of specific expertise, we can offer ideas and solutions because of our interaction with so many other clients. Our folks look at multiple businesses and their successes and challenges. That experience helps other clients who find themselves in similar situations,” Lacroix says.

“Working with an accountant familiar with your industry is a big benefit. Very often we’re able to save our clients taxes, because we know the ins and outs of an industry,” Voinovich says.

“For the most part, credentialed and professional accountants deliver a similar product. The difference can be in the specialized expertise and service model,” Congrove says.

“We have niches in certain segments, but we have to be able to back it up and deliver for the client,” Van Benschoten says.

No matter the accounting service, quality matters. “With the increasing complexity of what we’re asked to do for our clients, the emphasis on quality is paramount,” Lacroix says.

CPAs are quick to tout that professional designation after their names as a sign of quality. “There are competent tax preparers that don’t have a CPA, but I’d ask myself, where do I have the greatest likelihood of getting a quality product? I’d say it’s with a CPA, because of the advanced educational requirements, the stringent professional test and continuing education requirements,” Coen says.

“You want someone working with you that does more than keep the books. The key to success is more than the numbers. It’s assisting through the critical decisions day-in and day-out. A CPA helps you through key decisions as you operate and grow the business and face challenges along the way,” Price says.

“There’s a certain standard that accompanies the CPA credential that potential clients shouldn’t underestimate,” Voinovich says. “It’s required on the audit side, but not necessarily on the tax side.”

Accounting specialties can have additional designations. Accountants who assist clients with financial planning can be a Certified Financial Planner (CFP). Forensic accountants who unravel complicated accounting transactions, many of them nefarious, earn a CFF indicating they’re certified in financial forensics.

“Look for the right credentials for your industry and your business needs,” Congrove says.

Sealing the Deal

As a business hones in on a new accounting firm, the deal is sealed in writing.

“Our professional liability insurance requires us to get an engagement letter that sets forth the services we will provide for each client. The letter outlines the meaning of tax, audit and review in that circumstance,” Coen says.

“Failure can happen on both sides. The letter helps avoid delays, because it sets benchmarks and target dates. The letter takes the gray out of it for us and our client,” Petrus says.

The engagement letter often delineates client responsibilities. “It’s more than a relationship, it’s a partnership. Clients need to be responsible and have their information in order and be prepared for our on-site visits. We have to work together to be successful,” Van Benschoten says.

“We do background checks on those business clients who sign our engagement letter. We tell them it’s our first audit procedure for them,” Lacroix says. “When I put my name and the name of the firm on the dotted line, more than 4,000 partners, directors and principals across the country are counting on me to follow the standards of conduct and ethics policies.”

Every potential client wants to know how much their accounting services will cost. Pricing approaches run the gamut—billable hours, flat fees or fees within a specified range—and are spelled out in the engagement letter.

“Price will be an issue, especially if there’s not good communication and the client can’t relate the services to the price. The engagement letter helps alleviate that,” Coen says.

“Clients want to know upfront what their fees will be. We communicate that early, so there are no surprises or disappointment,” Voinovich says.

The engagement letter can be amended to reflect changes in services and associated fees that crop up during the relationship. “If we run into a problem or something unexpected comes up, we call the client and explain the situation. Then we update the engagement letter,” Congrove says.

Lisa Hooker is a freelance writer.

Reprinted from the September 2012 issue of Columbus C.E.O. Copyright © Columbus C.E.O.