Cabin Business

A small-business owner may be tempted to purchase an inexpensive software package to prepare his or her tax return and forgo enduring an annual audit from an outside CPA firm. After all, the small business may have a good product, good cash flow and few employee issues. The owners may not see the need for an annual audit because the business is family-owned, does not need bonding and does not anticipate having to borrow any money in the near future.

So why should a small business sacrifice part of its earnings for a CPA to prepare the tax return or perform an external financial audit? CPAs hold certain core values — continuing education with lifelong learning, competence, integrity, attunement with broad business issues and objectivity. These values emphasize the quality of service provided by the CPA.

Lifelong learning

A CPA has a broad educational background which includes courses in accounting and business. Once an individual becomes a CPA, his or her education is just beginning. CPAs in Arkansas must complete 40 hours of continuing education each year. This ongoing acquisition of new knowledge, skills and experience prepare CPAs for the ever-changing business and accounting environment.

Competence

A CPA is much more than a bookkeeper or a tax preparer. A bookkeeper records transactions; a CPA is aware of accounting rules that may allow for alternative treatment of a transaction and can communicate those alternatives to the business owner. For taxes, a CPA not only prepares a return, but is a source for tax planning. A CPA’s expertise comes from two basic areas: education and training.

Integrity

Many would argue that integrity is the cornerstone of the accounting profession. CPAs are committed to upholding the American Institute of Certified Public Accountants’ Code of Professional Conduct as well as state and federal laws regulating CPAs. The AICPA and the Internal Revenue Service place additional ethical requirements on tax professionals.

Attunement with Broad Business Issues

Taxes and accounting transactions are complex. Part of a CPA’s job is to add value by providing services needed by businesses and help them find a workable solution to their specific accounting and tax issues. There are times when even the smallest company needs a CPA, whether for tax planning and preparation or financial assistance. Small businesses can take advantage of a CPA’s learning and expertise. CPAs are not just number crunchers, they are knowledgeable in areas such as financial planning, employee benefits, taxes, and many other broad business issues. Business transactions have become more complex because of technological advances, international marketing, and complicated new regulations. These forces may necessitate a CPA’s involvement in both financial and business strategies which ultimately affect a company’s profitability.

Objectivity

According to the AICPA’s Code of Ethics, a CPA has the responsibility to maintain objectivity and integrity. This means the CPA must be free of any conflicts of interest and not knowingly misrepresent facts. In addition, certain engagements require CPAs to maintain independence, which allows professional judgment without compromising integrity or objectivity.

Why should a small business hire a CPA? There are times you need outside help to solve unfamiliar, complex accounting and tax issues. A CPA has the qualifications to meet those needs.

Dr. Patricia H. Mounce is a certified public accountant and associate professor of accounting at the University of Central Arkansas. Dr. Pamela Spikes is a certified public accountant and professor of accounting at UCA.