This publish is a part of a sequence sponsored by Outdated Republic Surety.
Many industrial contractors have skilled the stress attributable to the surety requiring them to acquire a monetary assertion ready by an authorized public accountant (CPA). Typically that is triggered by a big venture alternative. Confronted with the potential for shedding a venture, 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 problem. Nevertheless, development accounting is exclusive, and an accountant who is just not acquainted with its complexities may concern a press release with out the wanted schedules, with a steadiness 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 priceless 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 getting ready compiled, reviewed or audited statements, is crucial to make sure a contractor will get a powerful 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Supervisor for CBIZ CPAs, P.C., and Kelly Kimmel, Contract Bond Supervisor for the Kansas Metropolis department at Outdated Republic Surety Firm collaborated on answering the continuously requested questions that many firms have when trying to interact an exterior CPA for getting ready a monetary assertion to assist 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 shows in accordance with GAAP [Generally Accepted Accounting Principles], and
- Present schedules and breakdowns of firm monetary info displaying necessary particulars on how profitability and cash flows by way of the corporate.
A powerful monetary presentation is a big 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 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 interact in offering a reviewed assertion even when they’ve by no means ready a cost-to-cost (beforehand known as share of completion) assertion earlier than, as long as, in response to compliance guidelines, they intend on acquiring the information wanted to supply an enough assertion.
Nevertheless, the accountant you might have at all times used to your taxes could not at all times be the best choice when partaking a CPA for a GAAP-complying monetary year-end assertion. Each GAAP requirements and the tax codes are advanced, and it’s troublesome to be an professional in a single, not to mention each. Typically, it’s best apply to have separate specialists 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 companies often have separate departments for every service. They can collaborate on gathering monetary info, lessening the quantity of double work that could be required in finishing each a year-end GAAP monetary assertion and a tax return. Be conscious in your communication so you’ll be able to make sure that the really useful accountant has the {qualifications} and expertise required for each companies.
- Request suggestions out of your surety agent or underwriter. Typically these shall 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 companies which have offered different purchasers with acceptable statements up to now.
- Go to the CFMA Web site’s Service Supplier Listing. CFMA (Development Monetary Administration Affiliation) is a construction-oriented accounting group. The CPA companies which are lively within the CFMA neighborhood are typically skilled in offering monetary statements utilized by contractors to assist their surety program.
- Ask trusted friends within the business. Ballot different professionals throughout the business on the CPA companies 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 getting narrowed down your search, be sure to select the fitting associate by asking the fitting questions. The next are some examples of questions that will show you how to higher qualify your CPA:
- Total development accounting information
- Do you continuously carry out development accounting companies?
- Are statements ready by people or a staff of accounting professionals?
- Do the people engaged on accounts change from 12 months to 12 months?
- How does your agency guarantee that you’re updated on the latest 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 purchasers work in?
- What’s the dimension 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 dimension?
- Is your expertise on this space in depth?
- Have you ever labored with my software program programs earlier than?
- What has your expertise been with these programs?
- Asset to your agency
- Do you present perception and experience to your purchasers on what challenges and alternatives others within the business 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 business?
- Do you provide greatest apply ideas 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 three
Half 3 of three
Co-written with Halli Williams, CPA, CCIFP, Senior Supervisor for CBIZ CPAs, P.C.
This weblog was initially printed on the Outdated Republic Surety web site. It’s reproduced right here with permission.
Sources
https://www.ispartnersllc.com/weblog/five-types-testing-methods-used-audits/
https://us.aicpa.org/content material/dam/aicpa/analysis/requirements/compilationreview/downloadabledocuments/ar-00090.pdf
https://www.procore.com/library/construction-financial-audit
https://us.aicpa.org/content material/dam/aicpa/analysis/requirements/auditattest/downloadabledocuments/au-00326.pdf
https://us.aicpa.org/content material/dam/aicpa/analysis/requirements/auditattest/downloadabledocuments/au-c-00300.pdf
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