Condo Media - July 2010 - (Page 18)

ASKED & ANSWERED Accounting Conflicts Reports, Returns and Reviews Q A QUESTION: An association I manage wants to use the same CPA to produce the monthly and quarterly financial reports, file the association’s taxes and perform the annual financial review. I have reservations about this. Are my concerns justified? ANSWER: Ken Bloom, CPA, a principal in the Massachusetts accounting firm Bloom Cohen Hayes LLC, thinks your concerns are justified. The professional standards for accountants say that the opinions they offer in audits and financial reviews must be “independent.” That term isn’t clearly defined, Bloom acknowledges, “but if you dig deeply into the ethical standards for CPAs, you will find that they require independence in both fact accounting information, how can we review it independently?” Bloom asks. There is, at least, the appearance of a conflict, he believes, and the potential Professional standards for CPAs say the opinions they offer must be independent; their ethical standards require independence in both fact and appearance. and appearance.” That means an accountant must be able to review the financial information objectively. “But if we participate in the creation of the for an actual one. “There are people who don’t agree with me,” Bloom acknowledges, “but I definitely stay away from arrangements such as this.” While Bloom feels strongly that accountants providing financial reviews for a client should not also provide bookkeeping services, he sees no problem with their filing the client’s tax returns. But the Sarbanes-Oxley law, responding to Enron-type accounting scandals, has muddied those waters, Bloom explains. The law (which does not apply specifically to community associations and other nonprofits) prohibits accountants from providing both “attestation” and “non-attestation” services to the same client. Financial reviews are “attestation” services, requiring a professional opinion; tax returns fall in the “non-attestation” category. Bloom thinks drawing a line between financial reviews or audits and tax returns “is ludicrous. There is just no potential conflict between them,” he says. “I just don’t see it.” However, to meet the Sarbanes-Oxley standards, Bloom and other CPAs will typically ask clients to sign a form indicating that they understand the division between “attestation” and “non-attestation” services and have asked the accounting firm to provide both. CM Your Property Management Partner Ask about our: Online Services using our “Smart Technology” Paperless initiatives Complete Disaster Recovery System Comprehensive approach to project management World-class financial reporting AMO® and AAMC® designations “Redefining association management through innovation, painstaking attention to detail and an unwavering commitment to excellence and client satisfaction.” The Dartmouth Group 800.260.5808 18 CONDO MEDIA • JULY 2010

Table of Contents for the Digital Edition of Condo Media - July 2010

Condo Media - July 2010
From the CED’s Desk
President’s Message
CAI News
CAI Regional News
Asked & Answered
Homeowner’s Corner
Vendor Spotlight
Volunteer Spotlight
Board Member Insight
2010 CAI-NE Financial-Reserves Directory
Advertisers Index
Classified Service Directory

Condo Media - July 2010