CPA External Monitoring – Headache or Opportunity?

We have all had at one time or another been right in the middle of busy season, smack dab in the middle of February, when all of a sudden that nasty email pops up from our provincial institute. You have just won the lottery! Its Practice Inspection time again. 

You ask yourself, what has it been three years already? Why do I have to do this now? Why can’t those people just leave me alone to practice in peace?  Trust me we have all said the same thing at one time or another. We all know that as licensed public accountants we have to go through Practice Inspection every three years in order to be able to continue to do what we love, servicing our clients..

So you grudgingly read their instructions and begin to fill out all their necessary forms providing them all of the detailed information they require so that they can best assess how to make your life miserable for a few months. When lo and behold you get to the part where they ask you when your last external monitoring was done and who was it performed by.  That’s when you slap your head and say dang it I have to do that too?  When will it end? 

We all dread the entire process. But perhaps it doesn’t have to be so bad after all.  I’m not saying after all is said and done you are going to want to jump up and down and yell Practice Inspection is coming!! Practice Inspection is coming!! But you can help make it less stressful by following these three simple steps.

1) Get Yourself a Good External Monitor

Your external monitor is not here to judge you or to chastise you or to report you to some authority. Your external monitor is also not just here so you can say you have met your requirements for practice inspection.  Use that individual for good not evil! 

Your external monitor is here to help you improve. Your external monitor is a practitioner just like you, a colleague, and resource.  Your external monitor works for you! Your external monitor is your friend!  So just like when choosing a friend, make sure you chose a monitor you can trust.

2) Timing is Everything

Rather than waiting to schedule your external monitoring review to coincide with your Practice Inspection, get ahead of the game and schedule your review a year in advance of your next practice inspection date. Now I am sure you are asking – why in the world would I want to subject myself to an external monitoring review before I have to?  I’ll tell you why.

Remember that last practice inspection you had, when you sat down with the inspector and they went over all points they identified during your inspection. I bet you said okay thanks for telling me all that, I’ll make sure I do that from now on.  Well by scheduling your external monitoring a year in advance of practice inspection, now you can say all that to your external monitor.  Unfortunately that means you will have less to talk about with the provincial practice inspector when they come in.  But I am sure you will get over that.

3) Make it a Learning Experience

You can view external monitoring as something that needs to be done every three years so that you get the stamp of approval to continue practicing and move on. You can say goodbye Mr. or Mrs. Monitor see you again in three years.  But, hey, external monitors are people too, we wouldn’t mind a phone call now and then to ask how are things, how’s business, how’s that new Accounting standard work again?

Use the external monitoring process the way it was meant to be used as an opportunity for self improvement. Use the results of the external monitoring review to improve your client files before the practice inspector comes in.  Use the external monitor throughout the monitoring cycle to help you answer those nagging questions about those new Accounting or Auditing Standards you have been struggling with.  Use the external monitor as a resource to supplement your own expertise. Use the external monitor!

If you do these three things, then when practice inspection time comes around you can be ready, you can be confident and you can say my files stand up to inspection and I don’t have to sweat this one bit!

So, external monitoring – headache or opportunity? It’s up to you!

Wayne O’Connell, CPA, CA, LPA, currently provides consulting services to numerous CPA firms, acting as external monitor, file quality reviewer and other consultative roles. This is in addition to his practice of public accounting with the firm Jones & O’Connell LLP.  Contact Wayne for all your CPA firm advisory needs.


The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
 
 

Posted: Wednesday, March 15th, 2017 | Categories: Commentary.

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