Value of a Licensed CPA
WHY SHOULD CLIENTS HIRE A LICENSED CPA?
For many small and mid-size businesses, financial statement preparation means receiving a compilation engagement. Businesses can rely on the CPA profession to produce high quality financial statement information.
It has been almost 35 years since the standard on compilation engagements has been revised. The new Canadian Standard on Related Services (CSRS) 4200, Compilation Engagements, updates and strengthens the requirements and guidance for accepting, conducting and reporting on compilation engagements. Its impact will not only be felt by practitioners, but also by users—including loan officers who use compiled financial information when granting loans or extending credit to small and mid-sized companies.
The introduction of this CSRS 4200 will increase regulation for practitioners by bringing compilation engagements into the reserved area of practice of professional accounting.
CPA Saskatchewan has a legislated objective to assure the public of the work performed by registrants, specifically by establishing minimum requirements for the competency of registrants.
Some businesses need to be convinced of the benefits of choosing a licensed CPA when they might be presented with alternative options to hire non-licensed, non-CPAs at a lower cost. The provision of professional accounting services in line with standards of professional conduct is a highly specialized function within the overall umbrella of accounting services. A licensed CPA must meet rigorous qualification criteria including depth in their education program, maintaining relevant practical experience, and keeping up-to-date on technical competencies as we explain below.
THE IMPACT OF ASSURANCE AND FINANCIAL INFORMATION TO OUR ECONOMY
The pace of change in our world is accelerating. With globalization, increasing complexity of economic transactions, and rapid advances in technology, the level of sophistication in our markets and economy continues to grow. As the complexity of our world increases, the value of trust in the accuracy of the information upon which business decisions are based is rising. High-quality reported financial information provided by an objective, experienced, and qualified CPA plays a crucial role in building and maintaining trust and confidence in reported financial information. In turn, this creates positive economic growth and serves to protect the public interest.
Given the level of reliance placed on financial information by the public and the underlying economic systems, there is an indisputable need to protect the quality of the services used to uphold the public’s trust in reported financial information.
THE MICRO VIEW – HOW DOES THE CPA PROFESSION PROTECT THE QUALITY OF PROFESSIONAL ACCOUNTING SERVICES?
Our profession is privileged to have enshrined the practice of professional accounting within law, giving CPA Saskatchewan the ability to self-regulate the provision of these services to clients in Saskatchewan through a system of firm registration and licensure.
Firm registration and licensure with CPA Saskatchewan is required when a member engages in the “Practice of Professional Accounting”. The Practice of Professional Accounting is a reserved area of practice, meaning there is specific legislation enacted to ensure these services can only be provided by a licensed CPA member through a licensed CPA firm. The Practice of Professional Accounting includes the following engagements under Subsection 18(1) of The Accounting Profession Act:
- Audit engagements
- Other assurance engagements, including review engagements
- Providing financial reporting advice that references the professional standards within the CPA Canada Handbook
- Compilation engagements under CSRS 4200
A member requires a licence when they are a practice leader signing or issuing reports on behalf of a firm. Firms with at least one member practicing professional accounting must also be licensed. The following flowchart best illustrates the requirements for firm registration and licensure:
WHAT IS THE VALUE OF A LICENSED CPA?
Under Regulatory Bylaw 16.12, only licensed members and firms may use the term “Licensed Professional Accountant” when signing assurance or compilation engagement reports issued under the name of the licensed firm.
A licensed CPA comes fully equipped with this powerful toolbox used to execute high-quality work:
Not only are licensed CPAs experts in the provision of professional accounting services, they also have the skills to provide value-added services to their clients by making recommendations for process improvements or suggestions to increase the efficiency and effectiveness of operations. Clients of Licensed CPAs have access to this entire toolkit, benefiting from the unique perspective of these highly qualified professionals.
Within CPA Saskatchewan’s mandate to protect the public, unlicensed practice is taken very seriously. When an unlicensed, unauthorized individual or firm provides assurance or compilation engagement services referencing the standards of the profession within the CPA Canada Handbook, there is significant exposure to the public. One of the most important public protections is professional liability insurance coverage, which is a requirement of firm registration. This has a significant impact if a CPA makes a- mistake in their work and is sued for negligence. Without insurance, any court awards would need to be borne out of the individual’s own pocket.
LICENSED CPAS ARE WORTH THE INVESTMENT
As explained above, the level of quality in professional accounting services is directly correlated with the degree of confidence the public is able to place on reported financial information. Through legislating and regulating the provision of professional accounting services through licensed CPA members and firms, the public gains the confidence they need to make informed decisions for the betterment of our economy and society as a whole. When considering the importance of the public trust that is placed on professional accounting services, the value of a licensed CPA far outweighs the investment in annual engagement fees.