This submit is a part of a collection sponsored by Outdated Republic Surety.
Many business contractors have skilled the stress attributable to the surety requiring them to acquire a monetary assertion ready by a licensed public accountant (CPA). Usually that is triggered by a big challenge alternative. Confronted with the opportunity of shedding a challenge, it turns into a mad sprint, which can lead the contractor to decide on an accountant with the quickest turnaround time and who causes the least quantity of trouble. Nonetheless, development accounting is exclusive, and an accountant who shouldn’t be aware of its complexities might difficulty a press release with out the wanted schedules, with a stability sheet and revenue assertion that don’t appropriately tie into the schedules, or any variety of different errors rendering it unusable for the surety underwriter. At this level the contractor has spent helpful time, to not point out hundreds of {dollars}, for the assertion, however everyone seems to be again at sq. one, or worse, the bond is declined.
Understanding the anticipated time and capital funding, in addition to the position of a CPA in making ready compiled, reviewed or audited statements, is crucial to make sure a contractor will get a robust monetary presentation, not just for the surety, but in addition to make the most of for their very own inside controls. Halli Williams, CPA, CCIFP, Senior Supervisor for CBIZ CPAs, P.C., and Kelly Kimmel, Contract Bond Supervisor for the Kansas Metropolis department at Outdated Republic Surety Firm collaborated on answering the ceaselessly requested questions that many firms have when trying to have interaction an exterior CPA for making ready a monetary assertion to help their surety program.
Why does my surety care about my monetary statements?
Monetary evaluation is on the base of contract surety bond underwriting. A powerful CPA-prepared monetary assertion will do a number of issues:
Assist make sure the accuracy of the data offered,
Standardize monetary displays in accordance with GAAP [Generally Accepted Accounting Principles], and
Present schedules and breakdowns of firm monetary data exhibiting vital particulars on how profitability and cash flows by means of the corporate.
A powerful monetary presentation is a major issue the surety makes use of when confirming that an organization’s character, capability and capital align with their underwriting urge for food. It may possibly additionally help within the surety’s skill to stretch a contractor’s bonding credit score.
How do I select a CPA?
Legally, any CPA can have interaction in offering a reviewed assertion even when they’ve by no means ready a cost-to-cost (beforehand known as proportion of completion) assertion earlier than, as long as, in line with compliance guidelines, they intend on acquiring the data wanted to supply an enough assertion.
Nonetheless, the accountant you could have all the time used in your taxes might not all the time be the best choice when partaking a CPA for a GAAP-complying monetary year-end assertion. Each GAAP requirements and the tax codes are complicated, and it’s tough to be an knowledgeable in a single, not to mention each. Usually, it’s best observe to have separate consultants for every service, to make sure each your monetary assertion and taxes are assembly the proper, newest necessities.
The next are a couple of strategies for finding a construction-oriented CPA:
Contact your present accountant or monetary adviser. CPA corporations normally have separate departments for every service. They can collaborate on gathering monetary data, lessening the quantity of double work which may be required in finishing each a year-end GAAP monetary assertion and a tax return. Be conscious in your communication so you possibly can make sure that the really helpful accountant has the {qualifications} and expertise required for each providers.
Request suggestions out of your surety agent or underwriter. Usually these will likely be your finish customers of the assertion and subsequently they’ve a good suggestion of what they’re desirous to see and examples of accounting corporations which have offered different shoppers with acceptable statements prior to now.
Go to the CFMA Web site’s Service Supplier Listing. CFMA (Building Monetary Administration Affiliation) is a construction-oriented accounting group. The CPA corporations which might be energetic within the CFMA neighborhood are usually skilled in offering monetary statements utilized by contractors to help their surety program.
Ask trusted friends within the trade. Ballot different professionals throughout the trade on the CPA corporations that they use and what their expertise has been. Additionally ask in regards to the suggestions they’ve obtained from their surety firms on the statements.
What questions ought to I ask the CPA?
After you have narrowed down your search, be sure you select the fitting companion by asking the fitting questions. The next are some examples of questions that will allow you to higher qualify your CPA:
General development accounting data
Do you ceaselessly carry out development accounting providers?
Are statements ready by people or a crew of accounting professionals?
Do the people engaged on accounts change from yr to yr?
How does your agency guarantee that you’re updated on the newest GAAP requirements?
What’s the oversight course of to make sure that GAAP requirements are met when issuing a press release?
Tailor-made experience
Are you able to present a high-level description of the kind of development and area’s that your shoppers work in?
What’s the measurement of the most important contractor you’re employed with?
What income vary do most of your contractors fall into?
Have you ever labored with my scope of labor and firm measurement?
Is your expertise on this space intensive?
Have you ever labored with my software program methods earlier than?
What has your expertise been with these methods?
Asset to your agency
Do you present perception and experience to your shoppers on what challenges and alternatives others within the trade are experiencing primarily based in your observations?
Are you able to present benchmarking or perception into how our firm metrics evaluate with others within the trade?
Do you supply greatest observe strategies when observing our firm’s inside controls?
What challenges have you ever discovered that related firms skilled when partaking a CPA?
What helped them overcome these challenges?
Proceed studying:Half 2 of 3Part 3 of three
Co-written with Halli Williams, CPA, CCIFP, Senior Supervisor for CBIZ CPAs, P.C.
This weblog was initially revealed on the Outdated Republic Surety web site. It’s reproduced right here with permission.
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