By Ryan A. Northcutt, CPA
As CPAs, we enjoy new challenges and opportunities to serve new and existing clients. Part of these new challenges may include growing by adding new service areas. This is normal for many CPA firms as their practices grow and mature.
The OSCPA Professional Conduct Committee helps CPAs resolve client complaints. We have unfortunately found “one off” engagements or non-core service areas undertaken by a CPA or CPA firm to be the main issue which leads to the client or government complaint.
An often-overlooked consideration for many firms is the need to have a strong system for risk management as a regular part of a firm service. An effective risk management process will balance the need for taking on new challenges with the consideration of your capabilities to be successful.
Best practices would include firm owners and management regularly meeting and prioritizing new areas of service. In addition, part of the risk management process should be that the firm will need to devote the necessary resources needed to be compliant and produce industry accepted results. A firm should prepare for that fact that most likely initial engagements in new practice areas will not be immediately profitable. This is due to the time needed to build expertise, attend service specific CPE, and any other necessary training.
In the end, if a firm does not see an opportunity for the service to eventually become a core firm service, an effective risk management process should result in firm management electing to not participate in referrals for services in these areas.
The OSCPA has worked with CAMICO, a leading CPA insurance company to help highlight the risks related to undertaking new service areas and dabbling in areas which are not a part of the core competency of a firm’s practice.
Ryan Northcutt is a member of the OSCPA Professional Conduct (Ethics) Committee. He works at Aldrich CPAs + Advisors LLP, Lake Oswego as a senior manager.