How to Choose and Use a Certified Public Accountant

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 not-for-profit 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 computer systems.

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

Services for business owners:

• Setting up accounting systems
• Helping you secure financing
• Analyzing operating results
• Providing management consulting services on such subjects as computer systems
• Developing budgets and business forecasts
• Preparing tax returns
• Auditing, reviewing or compiling financial statements
• Assessing benefit and compensation plans

Services for taxpayers:

• Suggesting tax strategies
• Preparing tax returns
• Minimizing tax liability
• Representing you before taxing authorities

Services for the general public:

• Developing a personal financial plan
• Creating a family budget
• Planning for retirement
• Developing an estate plan
• Assessing insurance needs
• Advising you on divorce settlements
• Devising savings and investment strategies
• Helping you build college funds

How Do I Find a CPA?

Referrals from friends, neighbors, and co-workers are one of the best ways of locating a CPA. Business people, especially those in your field, can also be of help. So can lawyers or bankers. CPAs are, of course, listed in phone directories. And, you can get referrals from the Kentucky Society of CPAs by calling the Small Business HelpLine at (800) 292-1754.

What Qualifications Should I Look For?

Before you select a tax, accounting, or personal financial adviser, make sure you consider the following questions:

• Is the individual a certified public accountant?
• Is the CPA licensed to practice in Kentucky?
• To what professional organizations does the CPA belong and how active is he or she in those organizations?
• Are 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, by several also require post-graduate work.

Membership in professional organizations is also an important qualification. For example, over 4,200 CPAs belong to the Kentucky Society of Certified Public Accountants and over 310,000 belong to the American Institute of Certified Public Accountants. All 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 one every three years.

Members must also satisfy extensive continuing professional 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.

Compatibility, the last 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 for Their Services?

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 in 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 need 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 fee. Here are just a few of them:

• Be prepared to discuss your plans and objectives. CPAs are in the best use position to advise you and serve your interests when they understand the goals you have set.
• Gather information about business or personal financial decisions under consideration so you cans ask the CPA specific questions.
• Clearly explain what you expect from the CPA's services.
• Save yourself unnecessary fees by keeping good records and not using professional time for routine work.
• Keep 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.

The information in this article is for general purposes only and is not intended as specific advice for any individual and/or business. In addition, certain late-breaking tax developments may alter certain tax-planning strategies. Before acting on any advice, the services of a certified public accountant (CPA) should be sought.

Need Help with Taxes? Here's a Directory of CPAs in Central Kentucky

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