Non-CPA disclosure

[Gretel]

I tried to find in all my folders what I, as a non-CPA, have to put on financial statements I provide to third parties on behalf of clients. I know, I have it somewhere but couldn't find it. Can someone please help me?

[Corduroy Frog]

Unaudited

Gabriele, if you actually prepare financial statements, I would mark each page at the top "Unaudited" and let it go at that. If you are not a CPA, there is no preamble, no opinion, nothing that would be regarded anyway.

Bankers that know me will accept my statements without audit. But I would leave such things as audits, opinions, or reviews to CPAs.

[jainen]

In California it is illegal

>>If you are not a CPA<<

In California it is illegal for non-CPA's to prepare accounting statements.

[OldJack]

>>In California it is illegal for non-CPA's to prepare accounting statements.<<

In most states, if not all, it is illegal unless you are the employee bookkeeper of the business perparing a report for the owner (and not for 3rd parties use).

[Bees Knees]

Attaching a financial statement to a tax return as backup to data entered on the tax return is not considered to be a financial statement. To get around the prohibition against non-CPAs issuing financial statements, simply attach them to a tax return and tell the client to give the tax return along with the attached backup documentation to whatever 3rd party needs to see them.

[jainen]

an authority on this

>>simply attach them to a tax return<<

I don't have an authority on this, but it seems to me that the prohibition is not on presenting the statement, but on preparing it.

[jimmcg]

State Codes and Accountancy Board interpretations vary from state to state. Only way to determine the facts in your state is to contact your State Accountancy Board. Generally their website has the facts you want to know.

[Gretel]

Wow

So, what you are saying is: I do the bookkeeping for the client and the client asks me to fax, whatever I have in QuickBooks, to the bank or mortgage broker or vendor. This is illegal? To get around it the client would need to do this himself?

[Bees Knees]

Its not illegal in every state.

[jainen]

I never said anything

>>I do the bookkeeping for the client<<

I never said anything about bookkeeping. I don't even know what the difference is between bookkeeping and accountancy. I have a feeling that the state defines accountancy pretty broadly. Surely Corduroy's plan to mark a document "unaudited" will not prevent the licensing agency from being interested.

[Bees Knees]

326A.10, Minnesota Statutes 2006
Copyright © 2006 by the Office of Revisor of Statutes, State of Minnesota.

326A.10 UNLAWFUL ACTS.
(a) Only a licensee may issue a report on financial statements of any person, firm,
organization, or governmental unit that results from providing attest services, or offer to render
or render any attest service. Only a certified public accountant, a CPA firm, or, to the extent
permitted by board rule, a person registered under section 326A.06, paragraph (b), may issue a
report on financial statements of any person, firm, organization, or governmental unit that results
from providing compilation services or offer to render or render any compilation service. These
restrictions do not prohibit any act of a public official or public employee in the performance of
that person's duties or prohibit the performance by any nonlicensee of other services involving the
use of accounting skills, including the preparation of tax returns, management advisory services,
and the preparation of financial statements without the issuance of reports on them. Nonlicensees
may prepare financial statements and issue nonattest transmittals or information on them which
do not purport to be in compliance with the Statements on Standards for Accounting and Review
Services (SSARS). Nonlicensees registered under section 326A.06, paragraph (b), may, to the
extent permitted by board rule, prepare financial statements and issue nonattest transmittals or
information on them.

[Corduroy Frog]

Gabriele - Montana

Gabriele, here is some specific code annotated for Montana accountancy.

http://data.opi.state.mt.us/bills/mca_toc/37_50.htm

It will not take long for you to read the entire chapter 50 and draw your
own conclusions. Good luck.

[Lion]

Financial Statements

A fellow bookkeeping type told me to put "For Management Use Only" on the P&L a client requested from the data I'd input in QuickBooks. Think I better visit my state's website....

[Uncle Sam]

Non-CPA Disclosure

It was mentioned in prior posts here - and it's worth repeating -
YOUR STATE BOARD OF ACCOUNTANCY dictates what non-licensees can and cannot do.
I strongly recommend that even though those of you who aren't CPAs read the Statements on Standards for Compilation and Review Services that describes the proper wording for a report. True - it was meant for CPAs (where AICPA only recognizes CPAs), But it wouldn't hurt to just be cognizant of what is expected when you prepare an accountant's report attached to financial statements. There are a number of professional accounting associations representing non-CPAs that have designed alternative language to get around using language only reserved for CPAs.
My personal opinion - I don't believe that "For Management Use Only" legend is acceptable for non-licensees - because you must comply with certain professional standards in order for that to be permitted.

[Corduroy Frog]

Obligation to Due Diligence

Yes, I have to agree that caveats such as "For management use only" or "Unaudited" are not sufficient to defend one against a statutory prohibition.

But there is a real problem here, if tax preparers are not allowed to do their job by state statute.

How many of you, strictly as a tax preparer with no influence on the ledger or other records, can adequately prepare a business return?

This means take a set of QuikBooks statements simply printed off by the client, and fill out their taxes from that? QuikBooks is perhaps the worst, not because their program is flawed, but because they give the user latitude to do whatever they want. The argument is not restricted to QuikBooks, because if the client is using something else or home-grown Dome journals, they still largely are unaware of how to make their records compatible with a P&L or balance sheet.

If we are not permitted to fashion an income statement or balance sheet from unintelligible records, how can we file their taxes?? Can you imagine taking a client's unadjusted QuikBooks reports and filing taxes with no more than this??