Accounting & Consulting Essentials

Accounting advisory and assurance services help companies make business decisions and avoid monetary losses.

The accounting industry plays an integral part in today's business world. While many companies employ accountants to directly record and report financial information, public accounting firms offer companies several other types of accounting services. One important accounting service is consulting. Accounting consulting is commonly called assurance or advisory services in the accounting industry, depending on the situation. Large or publicly held companies tend to use assurance or advisory more than smaller companies because they have several different business operations.

Types

Public accounting firms offer assurance and advisory services for several different types of business situations. They specialize in each consulting service because many business situations include several pieces and require detailed analysis for each situation. Common advisory and assurance services include capital projects, infrastructure, corporate finance, risk management, technology and operational changes. Large public accounting firms offer more consulting services because they have a larger employee base and a wider range of experience.

Considerations

Advisory and assurance services offer companies a different perspective on their business situations. Advisory services play an active role in the decision process; certified public accountants (CPA) will engage company management about an upcoming business decision and review any financial information relating to the decision. Assurance services may be an after-the-fact service, in which companies take a portfolio of financial information and ask CPAs to review the information for any errors or improprieties.

Benefits

Accounting consulting services provide companies with an objective look at the upcoming business decision or the company's current financial situation. Company management may tend to be myopic in the decision making process and only see the good or bad possibilities in the decision. Bringing in outside experts can open up new ideas or benefits not previously seen by company mangers. CPAs are also able to make suggestions that may tilt the decision toward a more favorable outcome for the company, increasing the chance of success.

Warnings

CPAs and public accounting firms will not usually review a business situation from a legal stance. The American Institute of Certified Public Accountants (AICPA) specifically prohibits CPAs from making legal decisions, because legal contractual issues are not part of the traditional services offered by public accounting firms. Taking legal advice from a CPA can also result in serious legal ramifications for the company. Contract law is a serious part of the business world and should be approached with the proper legal advice from a law firm.

Expert Insight

The AICPA offers information for both companies and public accounting firms regarding accounting consultant services. An important change to this accounting service is the limited amount of accounting services a company can use from one accounting firm. The Sarbanes-Oxley Act of 2002 (SOX) placed heavy restrictions on using a public accounting firm for auditing and consulting services. Because the restrictions are applied differently according to each company, executive management should carefully review SOX guidelines to determine compliance with these regulations.

References

• Sarbanes-Oxley: Scope of Services Provided by Auditors
• PWC: Advisory services