Clear communication is essential in any professional partnership. Whether you’re working with our firm or considering hiring another CPA, understanding these key points can help you get the most out of this important relationship.
1. Once I hire a CPA firm, they will automatically handle everything tax-related for my business.
The services provided by a CPA firm are defined by the scope of work mutually agreed upon. When engaging the services of a CPA firm, clarity is key. It’s not a one-size-fits-all solution. A good CPA firm will work collaboratively to understand your unique needs and provide tailored services.
What this means for you: Be clear about your expectations and discuss them openly with your CPA prior to signing a contract. The scope and cost of services are linked – more comprehensive services will naturally come at a higher price point. Keep in mind that “everything” can be challenging to scope and price accurately.
2. I gave my accountant all my data. They will tell me if I need to file in another jurisdiction.
Most standard CPA services do not automatically include comprehensive advice on where and what to file. The U.S. tax landscape alone includes over 13,000 jurisdictions with various tax types – from sales tax to income tax, pass-through entity elections, and local registrations. Add international considerations, and the complexity increases exponentially.
CPA firms can help navigate these complexities as a separate engagement. This service, often called a nexus study, involves a detailed analysis of your:
- Tax laws across relevant jurisdictions
- Specific business activities and data
- Risk tolerance
- Compliance costs
- Potential tax exposure
- Business’s future plans
The goal is to provide you with the information you need to make informed decisions about where to file. While CPA firms can’t make these decisions for you, they can offer valuable guidance when specifically engaged for this purpose.
What this means for you: Don’t assume your CPA firm will automatically flag all potential filing requirements. If you’re expanding into new markets or have concerns about multi-jurisdiction tax obligations, proactively discuss the need for a nexus study with your CPA. Consider requesting a nexus study to get a comprehensive understanding of your potential filing obligations. This specialized service can provide crucial insights and help prevent unexpected tax liabilities.
3. My CPA firm will find any financial fraud when they conduct an audit.
It’s important to understand that standard audits are not designed specifically to detect fraud. Audits primarily focus on whether financial statements are presented fairly and in accordance with accounting standards.
Specialized forensic accounting services, which are separate from standard audits, are available for fraud detection and investigation. These services employ different techniques and have a different scope compared to standard financial audits.
What this means for you: If you have specific concerns about potentially fraudulent activity, discuss this openly with your CPA firm. They can advise on whether you need specialized forensic accounting services, which may be offered in-house or through a referral to a forensic specialist.
4. The engagement letter isn’t that important. It’s just a formality.
The engagement letter is a crucial document in the CPA-client relationship. While practices may vary among CPA firms, at Rea, we view the engagement letter as a vital tool for aligning expectations and ensuring mutual understanding.
NOTE: Tax-related services like fraud detection and/or a nexus study are not automatically included in standard tax preparation packages. These standard packages are generally designed and priced for basic compliance work. Additional services are considered an “extra service” add-on and an investment in your business’s tax strategy and compliance.
What this means for you: Take the time to read your engagement letter carefully. If anything is unclear, ask questions. This document isn’t just a formality — it’s your opportunity to ensure that the services you are being provided align with your needs and expectations. Clear communication at this stage can prevent misunderstandings and ensure you’re getting the services you need.
The Bottom Line
A successful partnership with a CPA firm is collaborative—built on clear communication, mutual understanding, and aligned expectations. Rea is committed to providing services tailored to each client’s needs to help you navigate your financial journey, with the ultimate goal of helping your business thrive. We count on your input to chart the right course.
Don’t hesitate to reach out with questions or to review your service needs. Let’s work together to ensure your financial partnership is designed for your success.
By Joseph Popp (Dublin Office)