CPAs are commonly asked to verify business information including ownership, finances and available funds. This is a useful part of business operations and often part of the bank lending process
There are three simple, clear and nonnegotiable points, however, to these CPA verification letters:
- CPAs may verify facts, not opinions. A CPA who attempts to verify an opinion – a logical impossibility – puts the credibility of the entire CPA profession at risk and should be dealt with harshly. CPA boards take this infraction very seriously. I’ve never seen an example of a CPA who attempted to verify an opinion but I would promptly report anyone who did as as incompetent and a danger to the public and the profession. A fact is “Jane Doe is the only person listed and listed as a sole proprietor on the business license”. An opinion is “Jane Doe owns 100% of the business”.
- The CPA verification letter must, by law, be included in a process called “peer review”. Peer review is expensive and time-consuming. The CPA’s cost for this review, in rough terms, is at least $1,000. So the total cost of an accountant’s letter – even if it is only one sentence long – is going to be over $1,000.
- It takes time to produce these CPA verification letters. It may seem like it takes only 15 minutes to draft, type and print the short letter letter but the required documentation of the process takes much longer. So it is unreasonable to ask your CPA to send over a verification letter while you wait at the fax machine.
So while CPA letters are common part of small business, they may not be as quick and easy as you thought.
See also: http://tonynovak.com/accountants-letter/