5-2 other services of CPA firms

Activities of CPA firms

As discussed in chapter 1, CPA firms provide audit services, as well as other attestation and assurance services. Additional services commonly provided by CPA firms include accounting and bookkeeping services, tax services, and management consulting services. CPA firms continue to develop new products and services, such as financial planning, business valuation ,forensic accounting(法医会计), and information technology advisory services.

Accounting and bookkeeping services

Many smaller clients with limited accounting staff rely on CPA firms to prepare their financial statements. Some small clients lack the personnel or expertise to use accounting software to maintain their own accounting records. Thus, CPA firms perform a variety of accounting and bookkeeping services to meet the needs of these clients. In many cases in which the financial statements are to be given to a third party, a review or even an audit is also performed. When neither of these is done, the financial statements are accompanied by a type of report by the CPA firms called a compilation report, which provides no assurance to third party. Attestation services and accounting an bookkeeping services are the major source of revenue for most large CPA firms. 

Tax services. CPA FIRMS prepare corporate and individual tax returns for both audit and nonaudit clients. Almost every CPA firm performs tax services, which may include estate tax, gift tax, tax planning ,and other aspects of tax services. For many small firms, such services are far more important to their practice than auditing, as most of their revenue may be generated from tax services.

Management consulting services. Most CPA firms provide certain services that enable their clients to operate their businesses more effectively. These services are called management consulting or management advisory services. These services range from simple suggestions for improving the client’s accounting system to advice in risk management, information technology and e-commerce system design, mergers and acquisitions due diligence, business valuations, and actuarial benefit consulting. Many large CPA firms have departments involved exclusively in management consulting services with little interaction with the audit or tax staff.

Although the Sarbanes-Oxley Act and security and exchange commission restrict auditors from providing many consulting services to public company audit clients, some services are allowed, and audit firms are not restricted from providing consulting to private companies and public companies that are not audit clients. Management consulting and other services are a significant source of revenue for most accounting firms.