From a distance, everyone in a profession or trade can look pretty much the same.
Lawyers lawyer, doctors doctor, plumbers plumb, financial advisers advise, car repairers repair, etc.
But while they may be in the same field, the differences in quality and ability are numerous. Knowing the right questions to ask can aid immeasurably in separating the wheat from the chaff, the experienced and effective from the “maybe we can snag this business” vendors.
What follows is a list of questions that will help you, as a construction company, know who knows what they’re talking about, and who’s talking about what they might not know.
1. What is your experience in working with construction company internal controls?
Most accounting firms should be prepared for a “What is your experience working with construction companies?” However, being more specific in this, or other, crucial area will either bring a confident smile to the accounting team’s faces, or a look of “Oh, no, what do we say?“ Also, if the answer is non-specific or off-focus in terms of internal controls, it’ll show.
2. What are clients with which you’ve worked and in what way did you make the biggest difference for them?
Many websites tout the companies with which an accounting firm has worked. But obviously, that doesn’t mean everyone at the firm worked with those clients. If the accounting firm lists construction clients, will the principals with the experience in that arena be assigned as well to you? What do they consider their accomplishments in working with building contractors?
3. If financial reporting for previous clients has ever indicated material misstatements, why, and what were your corrective measures?
If they’ve had problems in the past, you want to know. You also want to know what they did to fix them.
Having had a problem isn’t a deal-killer. For example, an older man and a teenager were once watching an auto race. The pit crew member assigned to refuel the race car didn’t get the hose off the car quickly enough, and it damaged the car and spilled fuel throughout the pit area. “I’d fire that guy,” the teenager said.
The older man replied, “Would you fire him because he made the mistake, or would you keep him because having made the mistake he now has knowledge and experience to ensure he avoid it, and others, in the future?”
In the accounting world, a lot depends on the nature, severity, and the firm’s response.
4. Of what professional associations are you a member?
If a firm says it’s an experienced and knowledgeable construction-related accounting firm, how does it grow its knowledge and capabilities? If their professional association memberships are lacking, what other method are they saying they use?
5. What is the percentage of the division of labor between human review and use of accounting software?
The Smithsonian Channel TV series “Air Disasters” often shows that airplane crashes generally have two causes: pilot error or a computer software problem.
An accounting firm that relies too heavily on either one is running a risk. What kinds of software does the firm use for construction accounting, and how does the computerized work relate to the accounting professionals responsible for your outcomes?
6. What are some of the suggestions you’ve made in the past to construction companies to improve their performance?
Just as accounting firms differ, so do construction companies, in style, approach – a great number of factors. And most, at some point, have problems.
It’s a plus if an accounting firm can list several significant improvements it recommended to construction companies, and that those suggestions would have made a financial difference for that company. A follow-up question is what was the issue that led to discovering the reason for the suggestion?
If a firm can’t recount such suggestions, perhaps it’s an add-these-numbers-and-subtract-those-numbers type of organization rather than also being a consulting arm that will benefit your company.
7. What examples can you share, that we can verify, of tax savings you’ve achieved for client companies?
Numbers don’t lie, but liars sometime give false numbers. Once you know the answers to No. 6 and No. 7, it’s easy to confirm what you’ve been told by contacting those companies. If the firm doesn’t want you to reach out to them, why?
8. What will be the organization chart for the firm members assigned to our account and what is their reporting and meeting recommendations?
There’s often a difference between who comes from the accounting firm to pitch you as a prospective client and who within the firm is assigned the work. If someone who will be working for your company isn’t at the meeting, they should be. If that person is considered by the firm to low-level to participate, it makes a statement.
9. What are significant financial areas in which you find construction contractors to be generally unaware?
This is another way to gauge the firm’s depth of knowledge. If they’re experienced in working with contractors, they’re experienced in seeing money-costing errors made by contractors. They should be able to name some of them.
10. To what construction accountancy journals do you subscribe?
If they can’t cite any, chances are they’re not really focused on construction.
This is not an exhaustive list of questions, as there are innumerable others depending on needs and issues. However, they are just different enough from the norm to give you a better insight into the accounting firm that will have a great effect on your business and your money.