DEVELOPING ENGAGEMENT LEADERS By Larry L. Perry, CPA. CPA Firm Support Services, LLC (CPA Practice Aids, LLC)

Transcription

1 DEVELOPING ENGAGEMENT LEADERS By Larry L. Perry, CPA CPA Firm Support Services, LLC (CPA Practice Aids, LLC)

2 This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. Practice aids, audit programs and audit correspondence are illustrative only. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. The contents of these materials have not been subjected to peer review by the AICPA or any of its representatives. By incorporating the concepts, philosophies, suggestions and practice aids included with these materials into to a CPA firm s system of quality control, the user accepts full responsibility for their accuracy and completeness.

3 ENTRY-LEVEL ACCOUNTANT SKILL TRAINING ABOUT THE AUTHOR: LARRY L. PERRY, CPA With 40 years' experience as a CPA, Larry is a nationally known author of accounting and auditing manuals, a professional continuing education instructor and author, and a consultant to CPA firms. He is managing member of CPA Firm Support Services, LLC, ( an organization providing live webcasts and self-study courses to small- to medium-sized CPA firms. Larry writes a weekly article on AccountingWeb.com, Today s World of Audits, focusing on accounting and auditing subjects applicable to small- and medium-sized entities.

4 TABLE OF CONTENTS PART 1 ROLE AND RESPONSIBILITIES OF ENGAGEMENT LEADERS LEARNING OBJECTIVES UNDERSTANDING THE PERSONNEL STRUCTURE OF CPA FIRMS Managing Partner, Shareholder or Sole Practitioner Tax Partner Accounting and Auditing Partner Engagement Executive Engagement Leader In Charge Accountant Assistant The CPA Firm Team ACHIEVING LONG RANGE FIRM DEVELOPMENT Staff Management Client Management Firm Management Affecting the Future of CPA Firms Recruiting Staff Personnel: Training, Supervising and Counseling Staff Personnel: Engagement and Quality Control Management: Serving Existing Clients and Developing New Ones: The Direction of Change Ways an Engagement Leader can enhance a CPA Firm s Image Discussion Exercise WHAT THE STANDARDS SAY Statement on Quality Control Standards No. 8 (QC 10) Requirements (sections excerpted and paraphrased) Leadership Responsibilities for Quality within the Firm Engagement Quality Control Review Qualifications of Engagement Quality Control Reviewers Documentation of the Engagement Quality Control Review Promoting an Internal Culture of Quality Supervision Engagement Leaders Review Quality Control Document Policies and Procedures for a Smaller CPA Firm (excerpted and paraphrased) from AICPA Statement on Quality Control Standards No. 8 QC 10) Policy 1: The firm s managing partner assumes ultimate responsibility for the firm s system of quality control Policy 2: Commercial considerations do not override the quality of the work performed Policy 3: Responsibility for developing, implementing, and operating the firm s quality control system is assigned to personnel with sufficient and appropriate experience, authority, and ability Policy 4: Performance evaluation, compensation, and advancement (including incentive systems) with regard to personnel demonstrate the firm s overarching commitment to the objectives of the system of quality control Policy 5: The firm devotes sufficient and appropriate resources for the development, communication, and support of its quality control policies and procedures Discussion Exercises... 22

5 AUDITNG STANDARDS AU C Section 300 Planning an Audit AU C Section 220 Quality Control for an Engagement Conducted in Accordance With Generally Accepted Auditing Standards System of Quality Control and the Role of Engagement Teams Leadership Responsibilities Relevant Ethical Requirements Acceptance and Continuance of Clients and Engagements Assignment of Engagement Teams Engagement Performance Consultation Engagement Quality Control Review Documentation Practical Note: Discussion Exercises TAX PRACTICE QUALITY CONTROL SYSTEM STATEMENTS ON STANDARDS FOR TAX SERVICES (effective January 1, 2010) Statement No. 1: Tax Return Positions Statement No. 2: Answers to Questions on Returns Statement No. 3: Certain Procedural Aspects of Preparing Returns Statement No. 4: Use of Estimates Statement No. 5: Departure From a Position Previously Concluded in an Administrative Proceeding or Court Decision Statement No. 6: Knowledge of Error: Return Preparation and Administrative Proceedings Statement No. 7: Form and Content of Advice to Taxpayers TREASURY CIRCULAR Subpart A: Subpart B: Sec Information to be furnished: Sec Knowledge of client s omission: Sec Diligence as to accuracy: Sec Fees: Section Return of a client s records: Section Conflicting interests: Section Solicitation: Section Negotiation of taxpayer refund checks: Section Best Practices: A TAX QUALITY CONTROL SYSTEM The Nine Elements of Quality Control Discussion Questions and Case CONCLUSION ENGAGEMENT LEADERS PERSONAL PLANNING WORKING PAPERS PART 2 A FOUNDATION OF SKILLS LEARNING OBJECTIVES NATURE OF PRESENTATIONS COMMON DENOMINATORS FOR SUCCESSFUL PRESENTATIONS Becoming Who You Are Maintaining the Attitude of a Servant Maintaining a Teachable Attitude... 40

6 Helping Others Meet Their Unique Needs and Goals Presenting Ideas and Involving the Listener in Reaching Conclusions Assisting the Listener in Applying Ideas to Their Personal Situations Soliciting Feedback and Objections Gaining Listeners' Agreement IMPROVING PRESENTATION SKILLS Preparation and Planning Keep It Simple: Sales Secrets: Memory Aids: Know the Subject: Enthusiasm: Desire to Communicate: COMPLETING THE PRESENTATION PACKAGE Effective Use of Questions Selecting and Using Presentation Aids PowerPoint Slides and Other Digital Media: Flipcharts: Handouts: USING CASE STUDIES AND ROLE PLAYS THE FINISHED PRODUCTS Discussion Exercise and Questions EFFECTIVE BASIC COMMUNICATIONS SKILLS COMMUNICATIONS TRANSACTION Verbal and Non Verbal Being Ourselves Communications Aids Limiting Distractions: Building block Approach to Simplifying Messages: Salesmanship Satisfying Needs: Interpersonal Skills: Listening Skills: Completing the Cycle COMMUNICATIONS WITH CPA FIRM PARTNERS AND STAFF ASSISTANTS Serving Your CPA Firm Communicating within Relationships CPA Firm Communications Pot Pourri Partner expectation gap The firm communication structure Dictating vs. encouraging buy in Firm expertise Assorted Affects of Communications on Supervision of Personnel Review notes Performance appraisals Listening skills Desire to help others Communications planning Sink or swim supervision Conclusion... 59

7 Discussion Questions and Exercises BUILDING PEOPLE AND PROFITS LEADERSHIP CHALLENGES Servant Leadership Practical Supervision Strategies that Work I NCLUSION C ONTROL A FFECTION Practical (Simple) Motivation Tidbits: Allow participation Positive feedback Provide a challenge Positive attitude Lead the team Build relationships Some Real Life Supervision Cases Supervising for Fun and Profit cases: A Different Drummer Boy: The Semi Annual Staff Competition: The Eight to Five Syndrome: What Makes a Good Supervisor? Human (not sub human!) Relations Skills: Being a Trainer vs. Dictator Pre engagement OJT activities: OJT during the Engagement: Post engagement OJT Activities: Some Practical Steps to Good Supervision: Preparing Effective Performance Appraisals: Discussion Questions Checking on Assistants' Progress Coaching: Becoming Better Managers of Time The First Step is Identifying Time Robbers: Making Changes: Managing Work Production: Discussion Exercise The Case of the Indispensable Staff Assistant: EFFECTIVE DELEGATION Delegation Defined Why is Delegation So Important and Yet So Hard? Reasons Why We Don't Like to Delegate: The Importance of Effective Delegation: Becoming Better Delegators and Delegates: Discussion Exercise HANDLING CONFRONTATION AND CONFLICT Causes of Conflict and Natural Defense Mechanisms Some Confrontation Rules Changing One s Attitudes about Confrontation CONCLUSION PART 3 CPA FIRM MANAGEMENT PRINCIPLES... 80

8 LEARNING OBJECTIVES: BECOMING ENGAGEMENT MANAGEMENT PROFESSIONALS An Engagement Management Nightmare THE BASICS OF ENGAGEMENT MANAGEMENT BUDGETING Preparing Realistic Budgets Emphasize the Economies of Billing Rate Mix Involve Engagement Personnel in the Budgeting Process Prepare Budgets at Appropriate Times Accurate Time Accumulation Use Accumulated Time for On going Planning Document Reasons for Budget Variances Billing for Client Caused Problems FORMALIZING THE ENGAGEMENT MANAGEMENT SYSTEM Discussion Questions UNDERSTANDING CPA FIRM FINANCES Recordkeeping: UNDERSTANDING TERMINOLOGY EXPLANATION OF COMMON RATIOS AND CALCULATIONS TIME REPORTING BILLING AND COLLECTION Billing at Other Than Standard Rates THE ENGAGEMENT LEADER S ROLE IN CPA FIRM FINANCES Discussion Questions CONTROLLING AND MANAGING THE WORKING PAPER REVIEW PROCESS Discovering the Gold Mine of Time Savings The Right Attitude: A Risk based Approach: Standardized Policies and Approach to Review: Responsibilities Approach to the In Charge Review Approach to the Leader's Review Approach to Partner Review Approach to Reviewing Tax Engagements Review of Tax Engagement Working Papers Review of the Return, Report or Memorandum Standardized Documentation for the Review Process: Discussion Exercises PRACTICAL MANAGEMENT ISSUES Retaining Professional Staff Personnel Building Successful Mentoring Programs Developing a Firm Culture to Attract Clients and Staff Personnel Discussion Questions CONCLUSION Engagement Review Checklist Audit and Review Engagements Engagement Review Checklist Review and Full Disclosure Compilation Engagements PART 4 ENGAGEMENT PERFORMANCE LEADERSHIP INVOLVEMENT LEARNING OBJECTIVES

9 INTRODUCTION A QUICK REVIEW OF PROFESSIONAL STANDARDS SQCS No. 8 (QC 10) A Firm s System of Quality Control Leadership Responsibilities for Quality within the Firm: Engagement Quality Control Review: Documentation of the Quality Control Review: Engagement Leader s Supervision: Engagement Leader s Review: AU C Section 300) Planning an Audit Statements on Standards for Tax Services Statement No. 1: Tax Return Positions: Statement No. 2: Answers to Questions on Returns: Statement No. 3: Certain Procedural Aspects of Preparing Returns: Statement No. 4: Use of Estimates: Statement No. 5: Departure from a Position Previously Concluded in an Administrative Proceeding or Court Decision: Statement No. 6: Knowledge of Error: Return Preparation and Administrative Proceedings: Statement No. 7: Form and Content of Advice to Taxpayers: Treasury Circular Sec : Information to be furnished: Sec : Knowledge of client s omission: Sec. 10:22: Diligence as to accuracy: Sec. 10:28: Return of a client s records: Sec : Best Practices: Discussion Exercises THE ENGAGEMENT LEADER S ROLE IN SUPERVISING ENGAGEMENTS Leadership Involvement KEY POINTS FOR ENGAGEMENT LEADERS INVOLVEMENT ON AUDITS, REVIEWS AND COMPILATIONS (refer to the responsibility table above) Pre Engagement Planning Phase Planning Phase Completion Phase: Discussion Exercises LEADERS RESPONSIBILITIES FOR TAX ENGAGEMENTS An Organized Approach The Planning Phase The Performance Phase The Completion Phase Post engagement Activities Monitoring Client Satisfaction: Internal Reviews of CPA Firm Performance: Reviewing Performance of Engagement Personnel: Tax Practice Documentation: Discussion Exercise CONCLUSION PLANNING DOCUMENT Client: Engagement Date:. 132

10 DISCUSSION QUESTIONS AND EXERCISES SUGGESTED ANSWERS Glossary