Preparation of formal financial statements – Oftentimes board
members or certain outside organizations require a CPA-prepared financial
statement. A compilation is the most basic of this type of engagement
whereby the CPA simply relies on the bookkeeping and prepares the
financial statements in accordance with generally accepted
accounting principals. A reviewed financial statement is a
larger engagement and certain analytical tests and other
procedures are implemented to give a limited assurance that
the financial statements are accurate. The highest level of
CPA-prepared financial statement is an audit. This type of
engagement is very large and includes a battery of tests and
procedures.
Preparation of Cash Flow Budgets – Cash flow budgeting is a
great tool to help with making short-term management decisions. When
implemented correctly and reviewed on a monthly basis, it can raise
questions around variances between budget and actual, investment
activity priorities and potential liquidity problems.
Preparation of Personal Financial Statements – A bank almost
always requires a personal financial statement when extending credit.
This statement looks at the business owner’s entire holdings such as
the home, business and retirement accounts. The review of the
statement with the business owner is often a wake up call. Many
clients like to have an updated personal financial statement regularly
to use as a report card on their wealth accumulation.
Segregating Revenue and Profit Centers within the Accounting System
– Many clients do not accurately breakout their financial statement
by business units or revenue streams. This is important when analyzing
how well a certain activity within your company is operating.
You can use these specific financial reports to manage reinvestments,
properly incentivize managers and salespeople, and value
the overall performance.
Business Valuation – Determining the value of your
company is not a simple task. It requires a skilled professional
that understands the business and the owners. The financial
statement doesn’t tell the whole picture. Only by uncovering the
investment activities and setting reasonable and thorough assumptions
can the valuation be taken as realistic by all parties.
Custom Development of Excel and Access Work Tools – Accounting
software packages oftentimes can’t give you everything that your unique
business requires. Most businesses have to rely on other systems to
help them calculate things like overhead allocations, projections,
department profit and loss statements, job costing, and sales commission
tools, to name a few.
Fixed Asset Tracking – Having a good system for tracking
and reporting on fixed assets can save your company on replacement
and maintenance costs, accounting labor, and depreciation planning.
Whether you outsource the management of the tracking to a CPA firm
or do it yourself, it’s an area that warrants proper attention.
Key Indicators and Benchmarking – Developing rules of thumb
calculations to help run your business can oftentimes be more
valuable than reviewing the standard profit and loss statement.
Proper ratios and benchmarks can help establish parameters within
which to work and manage risk appropriately.
