Selecting a CPA Firm
How to select a CPA firm for your church
Step 1: Evaluate Needs
If your church has used a CPA firm for years then this step will be quick as you already have a good idea of what your church needs. But if your church hasn't used a CPA firm before or it's been a number of years since one was last used, then it will be helpful to consider what your Church needs. Some helpful questions to consider while brainstorming include:
Does my church need audited financial statements? Or will reviewed or compiled financial statements suffice? Reviewed or compiled financial statements can provide a large cost savings but will be often be considered insufficient if your church is seeking or receiving grants or taking out large loans.
Does my church file or need to file tax returns? If so, will the CPA firm be hired to prepare and file the church's tax return?
Is the church seeking other types of services? Many CPA firms can provide payroll processing, bookkeeping services, consulting, or other specialized services.
But one thing to remember is, that if you need audited financial statements, the CPA firm will be limited in what other services it can provide because it needs to remain independent. So the CPA firm can't provide bookkeeping services to your church and then come back to audit its own bookkeeping work. These restrictions can vary on a case by case basis. Some good news is that generally, the CPA firm that does the audit can also prepare the tax returns without any independence issues.
Step 2: Prepare Request for Proposals
And remember that putting some more effort into the the RFP now, can make the rest of the process much easier and smoother. Solid RFPs will find more firms willing to invest the time to prepare and submit a response.
Step 3: Prepare List of CPA Firms
This is a critical step in getting a good response rate from CPA firms. Try to pick firms that are appropriately sized for your church, somewhat local, and experienced in church and/or nonprofit accounting. A big 4 accounting firm probably won't respond to a church with 200 members. But a small or midsize firm probably will. Conversely, if your church auditorium is larger than some college football stadiums, then a one person CPA firm may not be interested in an audit of that size.
As for church experience and locality, browse the state by state listing of CPA firms with church experience here.
Step 4: Request proposals
Contact the firms on your list. You can call, email, or fill out the contact forms on their websites. Give them a quick introduction and ask if they would be interested in the RFP. I recommend this approach over just emailing the RFP attachment right away. By asking if they are interested in the RFP up front, you'll know immediately about the firms that aren't interested and if you need to contact more firms.
Step 5: Proposal Evaluation
This is critical step of the process. Each proposal needs to be reviewed. Some churches may use a checklist to review proposals and others may be more subjective in their evaluations.
Some proposals may require asking the firm some follow up questions so they can be better compared with the other proposals.
Depending on the type of engagement, it's totally reasonable to narrow it down to two or three firms and request meetings with each firm to get to meet them in person and see which one would be the best fit.
Step 6: Recommendation
Often times, this process may be handled within the church primarily by the treasurer or administrator. In those cases, it might be a requirement for the selection to be presented to the governing body of the church for approval.
Step 8: Selection Notification
Once the selected firm has been approved, it's time to make the notifications. Notify the winning firm and inquire about the next steps. In many cases, the CPA firm will provide an engagement letter or contract to get things started. It's also recommended to notify the other firms. They will appreciate the notification and may inquire as to why they didn't get selected. That can help them be better prepared for other proposals in the future.