[Anonymous]

Hey everyone, it’s been quite awhile since I’ve posted on here since I passed my CPA exam back in March 2015, but I’d like to once again solicit any and all advice you can give on my current situation. I’m employed as an Accounting Manager at a small CPA firm in Virginia and our work predominantly consists of taxes, advisory services (my specialty focus), and the usual bookkeeping, financial statement preparation, payroll preparation, etc. that comes along with working extensively with small businesses.

My question is related to my boss’s desire to expand our business past the point we’re currently at, which is actually already well past many other firms in the area offering the same services. We’ve been contacted numerous times over the last several years by some of the larger, regional CPA firms with offices in the area to see if we were interested in taking on some of their review and audit clients that simply couldn’t afford their higher fees. I do have a bit of experience in review engagements, though I’m not entirely comfortable with performing all of the necessary procedures since approximately 90% of my work days are comprised of advisory work with various clients.

My boss is being pretty adamant about us branching out into new niche areas, and with frequent offers of auditing engagements and even the occasional forensic accounting engagement, I decided I’d better jump on board and start learning more ASAP. Should such a transition take place sometime in the not-too-distant future, I’d be shifting my advisory duties which I serve as the manager for currently over to other associates at the firm and would be stepping into a management position in audit (and forensics as well if we receive enough client interest in that). And not that I think it’s of particular importance, but I’m also currently on the partner track and I’m aware that my boss wishes to retire or at least step down from some of his responsibilities within the next few years and I happen to be his only successor at the firm, so I’m trying to make sure we make good decisions that benefit both of us going forward.

With all of that being said, would anyone be able to offer any suggestions or ideas on how to gain a good grasp of actually performing an audit engagement without any inside help available from my firm? I’ve been looking into the CFE certification as I already do quite a bit of fraud detection work in my advisory work, but I wasn’t sure how helpful that certification would be in understanding the fundamentals of performing an audit. And to clarify, we are most definitely a small CPA firm- there won’t be any audits of public companies, only private companies. For those who have obtained the CFE, do you think it has enabled you to better complete audit work?

And while I don’t believe there is a specific auditing credential or designation you can study for to show competence, I do remember seeing several online certifications through the AICPA on the subject at one point, so I also wasn’t sure if that might be something looking into.

I appreciate any and all advice you can offer on this topic! And thank you in advance!

[Pete]

The CFE is fairly easy test, next to the CPA. Definitely recommend taking the exam. I've spoken to people who have both the CFE and CPA at the same time; they told me that while the two subjects do overlap, they are pretty different overall. For example, you would likely do a FAR more extensive test within one area, under a fraud examination, avoiding random sampling.

Most smaller firms go into a VERY, VERY niche audit field/area and only focus on that one thing. Surprised he's interested in starting to take on audit clients; it's generally a tough transition for smaller firms. My old firm, which was pretty small (under 15 employees), was involved in audits. Speaking with others at larger firms, doing such a thing (engaging in audits) can be a huge mistake for a little firm. Most small firms (under 20 people) are best served by focusing their efforts on tax returns and more complex tax returns (ie. C-corps etc.)

The problem with a small firm doing audits is risk. A huge firm can buy the custom software packages to engage in such an activity, which decreases the chances you make a boo-boo (nice word choice?). With a smaller firm, you'll likely have a manual checklist, where it's VERY easy to make a $10,000 plus mistake. Without giving too many details (to keep their privacy), my old firm ended up paying over $15,000 in fines and a key individual had her license censured, which puts a HUGE burden on the firm (especially, when you already have so few CPAs, who can sign off).

Keep in mind, a few people from my former firm were former big 4 auditors, so they already had audit experience, yet still made a fairly costly mistake (at least for a firm that size). If your boss or someone else at the firm has experience that will probably be your best bet to transition. Simply picking up a book and reading “how to do an audit” can be a fairly risky move overall.

B=84 This exam was such a b**** that I thought I failed-don't know how these things work
A=76 Slacker I am, I'll happily take it
R=81 I LOVE taxes
F=80 I don't wanna get banned for an expletive I'm thinking with "yea" proceeding it

[Author]

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