How you choose an accounting firm may very well determine how safe your personal and business affairs are in the hands of others. The professional who gets hold of your financial information returns payroll, and other confidential business records will have to be trustworthy and licensed to do so.
Perhaps you've already shortlisted some accounting firms if you've searched for "an accounting firm near me" before. Still, a great-looking website or even a good list of services offered is no guarantee or confirmation that the firm or its CPAs have valid licenses and are qualified practitioners.
Before you invest in outsourced accounting services, it's advisable that you quickly verify the firm's credentials, check for state records, and see whether they are members of a professional review group. These simple checks can prevent you from potential headaches and will assist you in selecting an accounting partner having the qualifications that match what your business needs.
Why Verifying an Accounting Firm Near You Matters
An accounting firm can handle various services for you like preparing your tax returns, your financial statements, your bookkeeping, your company's payroll, and even your audit work. The need for a variety, or level of expertise is why different accounting services may require different licensing and professional requirements.
Checking an accounting firm local to you is one good way to verify whether the professionals you are relying on are able to deliver such services in that geographical jurisdiction. It may also reveal disciplinary actions, restriction on a license or limitation not readily available on the website of the firm.
Some of these checks can get you there:
- Has the accountant renewed his/her license?
- Has the entity been authorized by the law or regulatory bodies in the region where it operates?
- Is there anything in their record like disciplinary or enforcement actions?
- Is it necessary for the accounting firm's services to be carried out by a licensed accountant?
- Check if statements made by the firm match the documents.
- Determine if the firm's experience corresponds with your type of business and requirements.
This becomes a critical area of focus in cases where you will be requiring services like auditing reviews, compilations, or other attest work. You should not take for granted that all the people who work at an accounting firm are CPAs. A firm can have a team of bookkeepers, accountants ,tax professionals, enrolled agents, and CPAs who possess differing levels of qualifications and responsibilities.
CPA Licensing and State Board Verification Explained
A CPA (Certified Public Accountant) license is authorized and overseen by a state or the local authority's Board of Accountancy. According to where in the U.S. a board is located, there can be different licensing requirements. That means, it's important to verify the requirements of the regulatory authority in the jurisdiction you're interested in. One of the easiest ways to verify information about a CPA license is to use NASBA's CPAverify service. CPAverify database contains information about licensure of CPAs, which was provided by Boards of Accountancy throughout the country and which allows the public to search for CPAs as well as accounting firms.
Use the tool to look for the CPA or firm and then you can review the available licensing and status details and other regulatory or disciplinary information that might affect the professionalism of that CPA or firm.
If you prefer, you can also find out more directly by contacting the respective state board of accountancy, and if you are not sure how to find out which board you should refer to, NASBA gives a helpful list of the boards together with their contact details and websites. Some of the things you should be aware of when you are trying to review the licenses are:
- License status: Find out whether it's active or current. - License number: Ensure it agrees with information provided by the individual.
- Renewal or expiration: Confirm the credentials are still valid. - Regulatory history: See if there are open or past complaints and what they are about.
- Firm registration: In some cases, you may also want to make sure that a firm that is supposed to do accounting for clients is itself registered as an independent firm per the rules of the state.
So, when possible, check that the company you are working with or consulting is registered and appears in the state licensing register when appropriate.Do not rely solely on a firm's claim that someone is a CPA. Verify the individual and, when applicable, the firm through an official regulatory source.
How to Confirm an Accounting Firm Near You Is in Good Standing
After identifying an accounting firm in your vicinity, don't settle solely with In reality a CPA employee has been on board. Also, you should learn about whether the firm is legally permitted for the services it brings.
First off, clarify the main function you are giving to the accounting firm. A company seeking monthly bookkeeping may not have higher requirements for certification when compared to a business engaging a firm to conduct an audit. This differentiation is important because the licensing regulations governing different accounting services are not the same for all.
By matching the firm's name to official business registries, ensure the data matches consistently. One typical issue is entering a brand name while the company's lawful name is altogether different.
Request the firm to provide you with:
- Its proper business name.
- The CPAs' names and their respective license numbers.
- States or areas in which the firm's license is valid.
- Required business filings, details.
- Descriptions of professional affiliations.
- Most current peer review details, if any
If the firm provides audit or other regulated services, be particularly careful about confirming that it meets the requirements applicable to those services.You should also compare the firm's claims with official records. For example, if its website says that it provides audit services but you cannot find the necessary firm credentials or registrations, ask for clarification before proceeding.
Being unable to find information immediately does not necessarily mean the firm is unqualified. Licensing databases can differ by jurisdiction, and a firm's legal name may not match its marketing name. However, the firm should be able to explain where and how its credentials can be verified.
What Peer Review and Professional Association Membership Mean
Peer review accounting programs have become another key factor for a CPA firm to be rated high if they are engaged in services which are also subject to the review by the peers.
Peer review is not a guarantee of 100% perfection on the work of your business, and it is just one of the steps you need to take in verifying the work of a CPA.
When a firm asserts that a peer review has taken the place of them being a business with high integrity in accounting and auditing, you should be able to ask a number of questions:
- When was the last peer review that the firm was subjected to?
- What were the outcomes from this peer review?
- Which organization carried out this review?
- Is the result of this review relevant to the type of services that you are going to ask the firm to perform?
- Is the firm able to provide any evidence to you so that you can verify the result?
For your reference, the AICPA can provide you with the Peer-Review administrators in each state and so can easily identify who is the right one.Another potential source of information is through professional associations.
For example, professional organizations like AICPA maintain membership lists available for verification of membership membership.
Ensures that the jurisdiction has granted regulatory approval. Peer review offers some indication of quality.
What to Do If You Can't Verify a Firm's Credentials
Occasionally, you may look for an accountant in your local area and find you are not able to substantiate the firm's details.
Don't jump to conclusions, but equally don't brush it aside, Inquire from the company itself, more exactly request for the missing information and clarify the details about the information.
If you cannot verify the information, consider these steps:
- Visit the official state board website once more. Conduct your search by using the CPA's legal full name, license number, and the law firm's legal name instead of its trade name.
- Utilize CPAverify. If the appropriate jurisdiction is a system participant, NASBA's centralized database proves helpful.
- Call the state board.When in doubt, the state board of accountancy can clarify what there is to know from their online record.
4.Request the firm to provide evidence of its professionalism. In most cases, a professional who is truly a professional should be able to justify its registration and offer some of its history as supporting evidence.
- Stop before revealing your company's financials. Until you are more comfortable with the company, don't start sending tax returns, bank statements, payroll records or anything else that an investor doesn't need to see.
There are many reasons to keep looking if the firm cannot provide a convincing account of its qualifications and constantly sidesteps essential questions of authentication.
It is not to complicate the process of hiring. It is simply to ensure that the person who is managing your money is who he/she claims to be and is also able to perform as per your financial requirements.
