A question came up from a small nonprofit business client yesterday for the second time this month. The request was to produce a financial statement for the client’s Treasurer. I found myself thinking about the best words to use to clarify my position. I want to help by making this an easy and seamless process for them but I am bound by specific requirements that we have not yet addressed.
Both the former Treasurer and the incoming Treasurer made requests for different types of financial reports. The in-house bookkeeper doesn’t have any need to understand the difference between reports that she generates with my assistance and reports that I could produce in response to her boss’s request. My job is simply to fulfill the information request as allowed within the boundaries of my work.
Perhaps my best response is: “I am pleased to help your organization with financial statements. However, I must follow the standards established by my profession. Our current engagement agreement does not meet these standards. Let’s discuss how to proceed.”
Of course I understand that clients don’t care about CPA professional standards. That’s my burden. I must bridge the gap between what the client wants and what the profession demands in the easiest and most efficient manner.
The requirements for CPA-prepared financial statements are listed here in an AICPA document known as “AR-C Section 70” Perhaps the most value I can provide for many small business clients may be to show them when these requirements do not apply. We can avoid these additional requirements when I am engaged to:
- prepare financial statements only for tax returns
- audit, review or compile financial reports
- assist with the instruction or operation of the in-house bookkeeping or accounting system to manually or automatically generate financial reports
- Show how to produce financial reports within QuickBooks or other software
- provide litigation support
- provide personal financial planning
A small business client’s need for financial statements can often be covered by one of these exceptions, saving both time and money. It is worth spending the time to plan our work accordingly. The details should be clarified in a written agreement that makes sense to the the small business client’s key personnel and, when necessary, documents our understanding of how we met the requirements for CPA-prepared financial statements.
I am please to discuss how your organization can most effectively meet the need for CPA-prepared financial statements. Just make a call or submit an online inquiry below.
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