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Why You Should Keep Your CPA in the Loop

Planning for your year-end audit, review or compilation engagement should be kept on your mind all year round. There are several events that can occur in your business throughout the year that can impact the financial statements and the year-end engagement. We value a continuing and positive rapport with our clients throughout the year. While we’ll be in touch with you throughout the year, informing us as unique transactions occur allows us to consider the impact on your financial statements and if there will be any additional considerations for the year-end engagement, or if there are accounting considerations that should be done in the interim.

The following is a list of items that would be beneficial to communicate to and share with your CPA as they occur (this is not an all-inclusive list):

  • Modified or new debt agreements
  • Modified or new lease contracts
  • Turnover in senior management
  • Quarterly financial statements
  • Mergers and acquisitions
  • Stock compensation agreements
  • Executive bonus plans
  • Any other unique transactions that may require special accounting consideration

Providing new and modified contracts as they are entered into allows your CPA to read and assess the contracts’ impact on your business and financial statements well prior to the year-end engagement. This also makes your year-end to-do list shorter. Since the engagement team will be requesting these types of items from you at year-end, providing and discussing them upfront, while they are fresh in your mind, relieves some of the burden of holding and rehashing all of these items at once during year-end engagement planning.

Your CPA can even help ensure you are properly accounting for these transactions upfront, so long as their assistance does not create an independence issue. Your CPA will be able to evaluate whether or not there is an impact on independence before any work is performed. If independence would be impaired, your CPA will likely advise you to engage a third party to assist in any facets of the transaction accounting that may be needed. For example, an acquisition of a company may necessitate a formal business valuation be performed to value the acquired company’s assets at fair value.

By Kristi Ray