Assembling a Professional Advisory Team Part 3: How to “Account” for Your CPA

The environment for the construction industry has changed, and the market (revenue potential, funding, profit potential, risk management, bonding availability, workforce availability and enterprise sustainability) is different.

This changed environment dictates that construction business owners must change as well.

To change for the better, contractors should surround themselves with a highly qualified team of advisers, including a construction-specific CPA. Just as other professionals on a contractor’s advisory team should be properly selected, the process of aligning with the proper CPA should be just as rigorous.

Evaluating your CPA’s credentials and his or her ability to assist you with bonding, credit and operational needs can be critical in today’s changing construction marketplace. A trusted adviser who understands your business beyond the necessities of financial statements and tax returns is a valuable asset.

Doing business the “old way” in this new market will not deliver results. You must follow industry best practices to stay competitive. Seize opportunities now by evaluating your market, team and business partners, including your CPA.

A qualified CPA who has experience working with contractors in various markets with diverse issues can bring industry expertise to your advisory team. There is no greater value than the price of good talent.

Could Your CPA Pass the Test?

Ask your CPA several questions when examining his or her credentials.

1. Do you work with other contractors?
2. Do you work with industry associations and sureties?
3. Do you spend time with national and/or local Construction Financial Management Association (CFMA) chapters?
4. Do you hold the Certified Construction Industry Financial Professional credential (CCIFP) awarded by CFMA?
5. Can you assist with contractor-specific budgeting, break-even analysis and equipment and indirect cost (or overhead) allocation methods?
6. Can you assist with job costing?
7. Are you familiar with construction accounting practices, unique construction tax accounting methods and industry standard accounting and job costing software?
8. Can you help maximize cash flow?
9. Can you advise on new federal and state deductions and credits available for energy-efficient design and construction and other general business deductions?
10. Can you clearly explain accounting rules and terminology in relation to construction processes?

Construction Business Owner, May 2011