The relationship between a chief executive and his accountant is an extremely important one. An outside accountant can be one of your most trusted business advisors and a key to your success. That’s one of the reasons why a new initiative by the Public Company Accounting Oversight Board (PCAOB) is creating a stir in the offices of CEOs across the land.
Established by the Sarbanes-Oxley Act, the PCAOB is charged with establishing rules for—among other things—auditing, quality control, ethics, and independence. In April of this year the PCAOB issued a set of seven rules for auditors of public companies. Though focused primarily on tax services, these rules also address ethics and independence.
The Rule in Question
Rule 3523 is entitled “Tax Services for Persons in a Financial Reporting Oversight Role.” In a nutshell, this rule states that an audit firm must maintain its independence by not providing tax services to any person in an audit client firm who fills a “Financial Reporting Oversight Role” (FROR). In layman’s terms, this means that CEO’s, CFOs, controllers, and others cannot have the company’s CPA firm do his or her personal taxes, or those of his spouse or dependents. Using the same firm to perform both services would create at minimum the appearance of a conflict of interest.
So Now What Do I Do?
There is a daunting array of accountants and firms to choose from—from sole practitioners to huge national firms, from generalists to highly specialized CPAs. However, there are few basic guidelines you can follow in order to make the process of choosing the right accountant a little easier:
Don’t forget that your primary factor in choosing an accountant should be the value he or she brings to the relationship. And always remember that real value from an accounting firm comes from several key factors:
Evaluating such elements as a proactive approach to your total financial picture, the ability to bring specialized expertise to your situation, and superior professional credentials will help you make an informed decision on the CPA's skills and ability to address your unique needs.
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