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How to Select a CPA

Certified Public Accountants (CPA) and Public Accountants (PA) have met the requirements of California state law and are authorized to practice public accounting by the California Board of Accountancy (CBA). Only persons who are licensed by the CBA may call themselves a CPA or PA.

CPAs and PAs are required to complete continuing education in order to be eligible to practice public accounting. A licensee who completes the required minimum hours and type of continuing education may renew as "active." A licensee who does not complete the required minimum hours and type of continuing education should renew as "inactive" and may not practice public accounting.

Word-of-mouth referrals from individuals who have used the services of a particular CPA are probably the best way to start your CPA selection. When selecting a CPA, you should also consider the following:

  • Check the CPA's license status on the CBA License Lookup page or call the CBA at (916) 263-3680. Specifically, make sure the license status is clear and the expiration date has not passed. The search results on the license lookup page will also allow you to check how long the CPA has been licensed in California.
  • Check whether the CBA has taken any enforcement actions against the CPA. The CBA maintains a database of its Public Enforcement Documents where you can determine any enforcement action taken against a licensee.
  • Interview the prospective CPA either by telephone or in person. CPAs are authorized to perform a wide range of accounting services, including accounting, compilation preparation, management advisory, financial advisory, tax and consulting services; however, not all CPAs are authorized to sign reports on attest engagements. It is very important to ask what type of accounting work the CPA is authorized to perform, has experience in, and typically performs. Compare the CPA's experience to your service needs.
  • Ask what type of continuing education the CPA has taken recently. It is important to select a CPA who has completed continuing education consistent with the type of services you are seeking. Depending on the type of work the CPA performs, certain specialized continuing education may be required. For example, a CPA who engages in planning, directing, performing substantial portions of the work, or reporting on an audit, review, compilation, or attestation service, must complete a portion of his/her required continuing education hours in subject matter pertaining to financial statement preparation and/or reporting, auditing, reviews, compilations, industry accounting, attestation services, or assurance services.
  • If the services you require include an audit, a review of financial statements, or an examination of prospective financial information, you need to be sure that the CPA signing the report is authorized and qualified to do so. It is important to understand that there is a distinction between a CPA who is authorized by law to sign reports on attest engagements and a CPA who is qualified (due to knowledge and experience) to perform the work that he or she is being hired to perform; this includes signing reports on attest engagements.

    "Authorized" means the CBA has determined that the CPA completed a minimum of 500 hours of the experience required for licensure in attest work. The 500-hour minimum standard ensures entry-level exposure to attest engagements.

    "Qualified" means that regardless of whether a CPA has met the minimum steps to be authorized to sign reports on attest engagements, they comply with applicable professional standards, which requires the CPA to undertake only those professional services that can be reasonably completed with professional competence, including achieving a level of competence that will assure that the quality of service meets the high level of professionalism required. It is the responsibility of the CPA to evaluate whether their specific education, experience, and judgment are adequate to perform the services being requested. As a result, it important to ask the CPA about their number of years and level of experience, continuing education, and recent peer review, if any.

  • Before any work is done by the CPA, it is important to make certain that you receive an engagement letter detailing the work to be performed for you, who specifically will be performing the work, including whether the work is outsourced, confirming that all private and personal information is secure, and specifying the cost of the services.
  • If the services you require include either reviewed or audited financial statements, you should ask the CPA for the results of the firm's most recent peer review. Peer review is a systematic review of a firm's accounting and auditing services performed by a CPA who is unaffiliated with the firm being reviewed to ensure work performed conforms to professional standards.

    Firms are required to undergo a peer review every three years if they perform accounting and auditing services using the following professional standards:

    • Statements on Auditing Standards (SAS)
    • Statements on Standards for Accounting and Review Services (SSARS)
    • Statements on Standards on Attestation Engagements (SSAE)
    • Government Auditing Standards (Yellow Book)
    • Audits of non-Security Exchange Commission (SEC) issuers performed pursuant to the standards of the Public Company Accounting Oversight Board (PCAOB)
  • Ask about the office hours of the CPA; determine whether the office is open year-round; inquire if the CPA is available to take telephone inquiries.
  • CPAs are required to comply with CBA Regulations section 54.1. This regulation provides that no confidential information obtained by a CPA shall be disclosed without the client's permission. Therefore, you should ask whether the CPA discloses any of your confidential information to persons or entities outside the United States in connection with outsourcing any services provided by the CPA on your behalf. It is important to be aware that CBA Regulations section 54.1 pertains only to licensees of the CBA. It does not apply to other persons or entities who may provide you with financial services, including tax preparation.
  • Be aware that if your CPA prepares your tax return and offers you a Refund Anticipation Loan (RAL), the CPA must comply with disclosure requirements specified in the California Accountancy Act and CBA Regulations. An RAL is a loan that allows a taxpayer to borrow against an anticipated income tax refund. These loans actually are made by banks, but are frequently offered by tax preparers including CPAs in conjunction with preparation of the tax return. While these loans are most frequently described as an instant tax refund - as if they come directly from the California State Franchise Tax Board or Internal Revenue Service - they are in reality short-term loans that often have very high costs associated with them. Both the tax preparer and the lending institution often take commissions against the calculated tax refund - so the RAL is less than the amount of the actual tax return refund. CPAs offering RALs are required by CBA Regulations section 56 to make specified written disclosures to consumers, including the dollar amount the CPA will receive for facilitating the loan. These disclosures must be made at or before the time of making the referral to the lender or performing other activities to facilitate the loan, regardless of whether the taxpayer actually accepts the loan.

It is becoming more common to purchase public accounting services on the Internet. While this appears to be a convenient way to access a broad range of services, it is important to "do your homework" before selecting a practitioner. Keep in mind that because Internet practice involves no face-to-face client contact, it may be easier for unqualified persons to masquerade as licensees. Also remember, a practitioner offering services on the Internet may be physically located anywhere in the world.

The following information should not be construed as an endorsement or recommendation to purchase public accounting services on the Internet; rather, these tips are offered simply as consumer protection suggestions in advance of contemplating the selection of such an Internet practitioner. Keep in mind that the CBA's ability to assist you is limited to services provided by those who are licensed by the CBA. The following tips apply to Internet practitioners licensed by the CBA.

  • Check the status of the license by using our License Lookup or call the CBA at (916) 263-3680. Make sure the practitioner holds a current California license with active practice rights. Also, inquire whether there have been any enforcement actions against the practitioner.
  • Interview the practitioner either by e-mail or by telephone to ensure that he or she can provide the services you need. Inquire about procedures for providing and receiving information. Ensure that the practitioner is responsive to issues that concern you such as timeliness, accuracy, and confidentiality.
  • Verify that the information about the firm on its website is accurate. Does the firm provide the same information when you make contact by telephone? Does the address on the website match the address you received from the CBA?
  • It is of primary importance to make certain that before any work is done by the practitioner, you receive an engagement letter or other written documentation detailing the work to be performed for you, who specifically will be performing the work, and the cost of services.
  • If you are using the Internet to obtain a directory of CPAs or PAs, keep in mind that a directory listing does not ensure that the practitioner is well qualified or licensed. You still need to ask the appropriate questions and check the status of the practitioner's license.
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