How to Select a CPA by Doug Jones and Keith Middleton of Fah
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How to Select a CPA

Smart business owners know that a good CPA is a valued business partnership. Very often we are asked “How do I select a CPA?” The basic answer comes in three steps. 1) Define your company’s requirements for a CPA firm. 2) Interview and conduct due diligence on several firms. 3) Combine the results of your due diligence with your gut instincts about fit and which firm will best meet your needs. Read on for some additional helpful detail on this process.

STEP 1: DEFINE YOUR REQUIREMENTS

There are various factors to consider in your evaluation and selection process.

First confirm: what types of services and therefore technical capabilities, do you need from your CPA?

Services can range from:

  • Income tax compliance (and audit support if ever required)
  • Sales and use/other business tax compliance
  • Income tax planning
  • Compilation/Review/Audit
  • Special reports (SOC)
  • Transaction assistance and/or basic bookkeeping
  • Tax, business and industry news and best practices information

Then consider: how complex is your business and, therefore, what specialization/specific credentials do you need from your CPA?

Your CPA candidate should know if your business:

  • Has multiple entities, related party transactions, etc.
  • Operates across states, foreign operations and/or within a complex industry
  • Operates with a complex industry or has unique accounting standards/reporting matters
  • If there are outside investors
  • If it’s a multi-generation ownership

STEP 2: PREPARE SET OF QUESTIONS, COMPARE NOTES

You know exactly what your requirements are and have a few qualified candidates in mind. Now it’s time to interview. We recommend that you have a prepared set of questions to ask all candidates and have multiple people interview the candidates, then compare notes.

Important questions to include in the interview process:

Who is the engagement team?

It’s important for you to understand who is going to actually do the work, and who is ultimately responsible for the work that is done. Find out how often will you talk to/see that person. Will it be a firm/partner with experience with your industry or your business size? Is there a “fit” that will (hopefully) bring about a long-term relationship?

What is the billing structure?

Understand the exact services and the timing of work and deliverables you will be receiving. How will you be billed — hourly or built into the fixed fee? Have a clear understanding about costs and what can impact them.

Other considerations:

  • Are they able to generate a growth plan for your company?
  • What are the communication expectations (within same day? 24 hours? email vs. phone, etc.)?
  • Will they be responsive, available, and offer timely deliverables?
  • Do you have a personal connection?

YOUR DECISION: DON’T UNDERVALUE YOUR GUT

Look for CPAs or firms who offer:

  • Similar size/industry/services that you need
  • References that address quality/accuracy of work, responsiveness, knowledgeable staff

If you’re still unsure, don’t undervalue your gut!

DON’T FORGET TO REGULARLY RE-EVALUATE

Once selected, you should re-evaluate your CPA’s capabilities based on the changes in your business as your requirements may change over time.

If you don’t have a great relationship with your current CPA or don’t think you are getting the value you had hoped, consider sitting down with your CPA and having that frank conversation. More times than not the underlying issues are basic expectation setting and communication between the parties. After that conversation, if you don’t think your CPA is the right fit or maybe you have outgrown their capabilities, hopefully this outline will be helpful in selecting a new one.

Your CPA needs to be a valued business partner, so spending time in the management of your existing relationship or in the search for a new partner is a good investment in your business.

If you need assistance in evaluating how to have a better relationship with your CPA, or need assistance in selecting a new one, please contact us or call (804) 955-4440 Fahrenheit Advisors today.

 About Doug Jones

Doug Jones is a Managing Director focusing on providing Business Advisory and Fractional CFO services to middle-market companies. Doug has significant experience selecting and effectively working with CPA firms to add value to a business. Contact Doug Jones.

About Keith Middleton

Keith Middleton is the Co-Managing Partner of Fahrenheit. Prior to Fahrenheit, Keith was a CPA for 12 years and has been an active purchaser of CPA services ever since. Contact Keith Middleton.

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