Among the most important advisors to a construction firm are: Professional surety bond producer Construction-oriented certified public accountant Knowledgeable construction/surety attorney Business banker This presentation will focus on construction oriented certified public accountants (CPAs). 2
Business professionals who specialize in providing audits and reviews to, and who offer accounting, taxation, business formation, business operation consulting, and other planning services for construction firms They are critical to the success of the financial management of your business. The quality of the CPA and the degree of construction financial and taxation knowledge are crucial to obtaining the optimum level of surety credit. 3
A CPA is a certified public accountant who is licensed by a state board of accountancy. They must possess a baccalaureate or higher college degree and have completed at least 150 semester hours (five years) college credits with a sufficient number of accounting and business credits. To earn the license, CPAs must pass a rigorous uniform exam on financial accounting, business environment concepts, auditing, and regulation. Many states also require additional educational and experience requirements for certification. 4
Provide audit and review services to construction firms Understand the complex accounting and tax issues facing construction firms Prepare timely and accurate financial statements, which sureties use in determining bonding capacity and lenders use to determine borrowing limits Know and work well with your surety bond producer, attorney, and banker May provide consulting services on financial, regulatory, safety and management issues Help a construction firm understand the proper relationship between direct costs (labor, material, subcontracting, and equipment costs) and indirect costs (payroll taxes, supervision, tools, vehicles, supplies, insurance and support costs) 5
Help a construction firm understand its cash flows and cash needs Consider tax implications and strategies to mitigate taxes to improve a construction firm s cash flow and profitability Assist the construction firm in selecting and maintaining a strong internal cost accounting system Assist a construction firm with its business planning tasks (budgeting, tax planning, and strategic planning) to improve profitability and financial strength 6
Mutual commitment Respect and trust Clear communication Responsiveness Availability 7
What is your background and experience with construction clients? How long have you handled construction clients? Explain your knowledge of and experience with the construction business, including accounting rules, tax laws and regulations, internal cost accounting systems, cash management, and tax planning strategies. Do you specialize in construction firms that are my size or larger? What software do you recommend for my business? Can you help me select my accounting system or optimize my current system? Does the CPA adequately understand my business and its unique problems? 8
Has the CPA received positive recommendations from my peers and business advisors in the construction community? What is your fee structure? How often will I be billed? Will you work on the matter or will an associate be involved as well? If so, how will the work be divided and billed? What is the estimate of how much this will cost? How will the you inform me of developments? Do you offer free construction-related newsletters and/or seminars to your clients? Are you an active member of local, regional and national construction trade associations? Can you provide a list of references? What was the result of your last peer review and can you provide a copy of your peer review s report? 9
Seek the advice of your professional surety bond producer, who can serve as a valuable referral resource. Talk with your peers in the construction community about their accountant. One resource to consult for names of CPAs specializing in construction firms is the CICPAC (Construction Industry CPAs/Consultants Association) member directory, available at www.cicpac.com/member. You may wish to contact the relevant state board of accountancy office to ensure that the CPA is currently licensed. 10