Academic journal article Journal of Accountancy

CPA Firms Can Help Manage Clients' Businesses without Losing Their Independence

Academic journal article Journal of Accountancy

CPA Firms Can Help Manage Clients' Businesses without Losing Their Independence

Article excerpt

Practitioners serving small businesses as management advisers often are faced with a problem - a loss of independence. But at the same time, taking on the added role of management adviser also is an opportunity - both for themselves and their clients.

When a client invites its accountant to take on a larger managerial role, even on a part-time basis, the independence issue becomes, central. That's because accountants are taught to stay clear of potential conflicts that might jeopardize their personal independence. As a practical matter, there is a way for CPAS to take a stronger management advocacy role without a need for independence.

And therein lies the opportunity.

While a CPA in that position no longer can audit or review a client's financial records (any compilation would have to disclose the lack of independence), there is little else to stand in the way of offering a valuable and needed service. (For details on the issue of independence, see Ethics Ruling 74 - Audits, Reviews or Compilations and a Lack of Independence.)

CPAS should accept the opportunity to assist organizations in as many management and financial areas as possible. They should, in essence, become the part-time "controllers" until their clients can afford or are ready for staff people to take over. CPAs should be willing to handle bank and other financing arrangements, give advice on normal management decisions, sit in with the owners in financial negotiations, provide projections and business plans and be mentors to their clients. …

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