I am a financial accountant and prepare Financial Statements and payroll reports for a small client - Subway Restaurant - as a side job. My client will have a big CPA firm relatively speaking, prepare the business partnership tax return and their individual tax returns. The CPA firm for preparing tax returns wants a CD of my Quickbooks in addition to all payroll filings and sales tax return for the year. They say they need the CD to build a history in case of audits. I find the request for CD not normal but would like to hear from you all what you think. What reports/documents do you ask of your clients in such cases? Thanks in advance for you input.
Clearly I'm not a big CPA firm by any measure (exceptions for those smaller guys), but what they are requesting is a little excessive for a tax preparations service. On the pro side, they have the raw data in the QB files to do a basic scan of the data to see if things look right for the various accounts, and it provides some of the details that may be necessary to have for the tax preparation. Having some of the tax reports, payroll mainly, would be helpful as I believe that what you report on the W-3 should match the numbers reported on the tax returns as wages expense. They're also able to reconcile the tax expense using the same numbers. On the con side, they might be opening themselves up to more liability by having those details and not finding any errors (if there are any). It's a lot of work and a burden on you or the client to furnish that amount of details for a return preparation. The sales tax returns often do not tie back to the amount of income reported on the financials due to other non-sales income the company might have. The only payroll reports that may be necessary would be the W-3 and annual 940. To the degree that the client was given copies of payroll and sales tax reports, they can make the copies (or you get to bill for the time to recreate them). I find it's a bit excessive to request as much as they are asking for. Of course, the client may have asked the big CPA firm to check over your work, and having that QB data and the sales and payroll reports would allow that.
-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net
Very common practice. I request the client QuickBooks file all the time. It makes for a much more efficient tax return preparation process. It saves accountant time and therefore, the client money in terms of lower tax preparation fees.
Presumably you furnished copies of tax reports and copies of all write up work (ledgers, journals, trial balances, etc) to the client on a periodic (monthly? ) basis. Therefore client can furnished copies of these to the CPA firm. ChEAr$, Harlan Lunsford, EA n LA
I usually ask for the QB data file. The client can e-mail it, FTP it, put it on a CD/DVD, etc. However they want. I typically find it is more efficient to look at the P&L and balance sheet and then decide on the reports I want. If I don't have the data file then it takes longer as there are at least 2 rounds of the client providing documents. And often one of the reports from the second round leads to the need for further reports. Then if there are journal entries, I have to wait for another set of reports.
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here.
All logos and trade names are the property of their respective owners.