You are here

Things to Consider as You Choose Your CPA Firm

The decision to work with an accounting firm is one that many Entrepreneurs know will need to be made one day. What you may not realize is how quickly that day will come. That’s totally understandable. You’re focusing on how you take your business from a great idea to a sustainable enterprise. As you move through your due diligence process we’d like to highlight a few areas we believe you should spend real time considering.

Industry Expertise

While anyone with CPA credentials could perform an audit, choosing a CPA that focuses on your specific industry and sector plays an incredibly important role in the client experience and the results. Technology companies, whether biotech, medtech, life science or software, have some complex accounting situations and your venture capital investors have high expectations. Make sure to ask what experience a firm has in your industry/sector.

Ability to Grow with You

By taking in venture capital, what you are saying is you are ready to get big, and to do it quickly. To be able to do this successfully you need to ensure that your CPA firm has the bench strength and expertise to see you through all the phases of your business, from start-up to exit or IPO. The last thing you want is to be in the middle of a growth phase or pre-IPO activity and find out the firm you’re with doesn’t have the expertise to do the job, doesn’t have the staff to do the job, isn’t qualified to practice in front of the SEC, or that they are going through their own acquisition and now you have a whole new firm to contend with.

Ask questions pertaining to the types of successful exits the firm has assisted other clients with. How have they dealt with allocating the resources to meet the growing demands of clients as their businesses get larger and more complex? If you don’t consider this point you may have to spend time in the future going through this process all over again when you should be focusing on your business’s next phase of development.

Engagement Team & Owner Involvement

When you decide to engage with a firm to do an audit, what you are really purchasing is the interactions and communication style of the people performing the service. Utilizing deep industry expertise, a seasoned management team and well-trained personnel on the account will save you time and hassle when it comes time for audit fieldwork to begin. To get a sense of what it will be like to work with a firm, ask them questions related to who would be working on your account and ask to have them at the proposal meetings. Get an understanding of the years of experience they have and how the engagement teams are structured and staffed.  The audit isn’t done until the partner signs off on it so make sure you are comfortable with the level of owner involvement.  You should be confident you are getting the CPA firm’s best team assigned to your job. 

Billing and Fees

We all know that in business, price is important. But be warned that the adage “you get what you pay for” still applies. It’s important not to be so focused on price that service and expertise slips or you end up feeling nickel-and-dimed every time you need to speak to someone for advice. Do the firms you are considering offer fixed pricing for their services or is it based on hourly rates? If the audit takes longer than expected or a particularly sticky accounting situation is uncovered, what is the likelihood that you will receive an additional bill? If the firm bills hourly, what are the standard hourly rates by level and how often are those rates likely to change?  Getting this understanding up front will prevent unpleasant surprises in the future.

Providing Value

Over the years, there has been a shift where an audit is viewed as a commodity service. As people who love what we do, we think there is something missing in that mindset. A good audit should not be an exercise in simply ticking and tying numbers, it should be a practice that enables you to handle the coming challenges better. Even as a serial entrepreneur you may have detailed knowledge of only a handful of companies while a CPA with a focus on your industry will have seen hundreds.  The ability to tap this sort of expertise can make the difference between a compliance-only relationship and a value-added one.  At the end of the day, if the firms you’re talking with can’t share with you examples of how they have created value for clients, you shouldn’t be considering them for your CPA firm.