Doing the Right Thing: Recognizing Your Limits

By:
ROBERT E. SOHR, CPA, NYSSCPA Professional Ethics Committee
Published Date:
Aug 13, 2014

We CPAs can do it all. We meet rigorous academic standards, taking courses (now at least 150 credit hours worth) in accounting, auditing, business law, finance and economics. We pass a strenuous exam—considered by some to be among the toughest in the world—and gain meaningful work experience under the guidance of veteran accountants. With all that training, there’s nothing we can’t tackle. Right?

Wrong!

Part of being a trusted professional is recognizing that there are limits to your knowledge and expertise. In fact, given the slew of rules and regulations issued by governmental authorities at the federal, state and local levels, and the explosion of information from an array of regulators and standards setters, there’s no way you could master it all.

However, throughout several years of service on the NYSSCPA’s Professional Ethics Committee (PEC), I’ve seen cases where CPAs render deficient audit services to their clients because they didn’t have the required skill set or expertise. When the CPA is asked about his or her poor judgment, during the subsequent ethics investigation, the response is usually, “I was unaware of the specialized requirements. My clients asked me to perform a service that was new to me. I won’t render that service ever again.”  But it’s too little, too late—the ethics violation has already occurred, and innumerable hours have already been spent (which I can almost guarantee will not be billable) responding to the referring agency. On top of that, you also have an unhappy client! So, the question to ask yourself is, “What should I do if my client wants me to perform a service for which I have had little or no recent experience?”

There are many ways to handle a client’s request when you don’t have the requisite training and experience. You can refer your client to a firm that does have the ability to perform the service excellently. After all, wouldn’t a referral resulting in quality service keep your client happy?

But, you may be thinking, “I don’t want to have another firm provide a service for my client!”  Well then, you will need to get the necessary training and experience—and that can be expensive. Alternatively, you can hire people with the necessary specialized skills or perhaps consider merging with another firm that has the expertise. This can be a sensible solution, particularly if you plan to grow your practice in the specialized area. You could also look for a joint venture partner to bring the necessary skills and experience to the table for one or a few specialized engagements. Either way, remember that you are responsible for providing adequate supervision and reviewing the specialized services being provided. Make sure you and the entire engagement team meet any specialized training necessary. (One such example is the specialized CPE—continuing professional education—required for Yellow Book engagements.)

So which way will your firm go?  If you want to keep things simple, limit your practice to services you are competent to perform. If you plan to expand into new service areas, develop your training programs now for you and your staff.  Either way, render all services in a professional and competent manner.
Maintain a high ethical standard for your firm. Make sure that all your dealings with regulators are friendly ones. Most of all, keep your clients happy by providing only quality professional services.

This article is for informational purposes only. For further guidance on professional issues, please see the AICPA Code of Professional Conduct.

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