Should CPA firms use certified bookkeepers?

The answer is an emphatic yes ... and no

By Steve Sahlein

Despite their extensive training and expertise in accounting, CPAs face the same problem in hiring bookkeepers: They don’t really know what they are getting until the bookkeeper has been on the job for several scary months.

The reason is borne out by several surveys conducted by Lewis & Clark Research in Raleigh, NC, which surveyed the 30,000 members of the American Institute of Professional Bookkeepers (AIPB), the national association for bookkeepers.

The first survey, in 1999, showed that 37.9 percent had learned bookkeeping almost entirely on the job and another 52.6 percent had learned bookkeeping about half on the job and half in school. Only 8.9 percent had attained their skills and knowledge entirely in school.

A second Lewis & Clark survey of 30,000 bookkeepers in 2000 revealed that 38 percent had only a high school education and another 33 percent attended community college, where they may not have taken any accounting courses.

These statistics confirm what many CPAs know from experience: Regardless of what a resume shows, you do not know what you are getting until a bookkeeper has been on the job for several months. A string of prior “bookkeeping” jobs and recommendations from employers who know nothing about accounting does not tell you if a new bookkeeper thinks GAAP is a trendy store or that Quickbooks does the accounting for you.

The academic taboo

Although most CPAs and small-business owners treasure a good bookkeeper — one New York City business owner told us he never mentions his bookkeeper’s name to colleagues for fear that they will lure her away — academia does not.

Yet as of 2006, not a single four-year college teaches bookkeeping. In fact, if you mention “bookkeeping” to an academic, the conversation will stop. It is comparable to the reaction you might expect if you tried to discuss nurses’ aids with the chair of surgery at a medical school.

Thus, bookkeepers are typically receptionists or secretaries who filled in when the company bookkeeper left. After paying bills, sending invoices and filing purchase orders for a while, they are called “bookkeeper.” When they realize that bookkeeper jobs pay better, they apply. Soon they have a resume of bookkeeping jobs and bare-bones knowledge of key skills, such as double-entry accounting, which they have learned on the job. This leaves many potentially excellent bookkeepers with only a spotty knowledge of accounting.

Of course, there are superb bookkeepers who have excellent skills. But their resumes may not look much different than bookkeepers who have little training or knowledge. In fact, they may even lose out in the job market to less competent competitors who “interview well.” Even among top bookkeepers, there can be a wide variation in skills and knowledge, depending on the bookkeeping or accounting courses they chose to take. Because there was never a national standard for bookkeepers prior to 1998, there is no uniformity in skills and knowledge among different bookkeepers.

Certification for bookkeepers

In 1998, the AIPB created the Certified Bookkeeper (CB) program. The AIPB, in consultation with the business, accounting and academic communities, set the following national standards for the certification of bookkeepers:

Pass a national exam covering five specific subjects.
Sign a Code of Ethics.
Demonstrate two years’ experience working as a bookkeeper.

Continuing professional education is required to retain certification.

The national examination was given at any of 300 Prometric (formerly Sylvan) Test centers in three parts, each lasting two hours. The five subjects were as follows:

Adjusting entries (including bad debt for book and tax purposes)
Error correction (including the bank reconciliation)
Payroll
Depreciation (book and tax, but excluding disposal of assets)
Inventory (perpetual and periodic methods, weighted- and moving-average, FIFO, LIFO and LCM costing)

New requirements added

In October 2004, internal controls and fraud prevention were added because many very small businesses that rely on bookkeepers use a CPA only to prepare their tax returns and do not know that internal controls even exist.

In January 2006, the testing for both inventory and internal controls and fraud prevention was changed from an exam at Prometric to an open-book exam, in both cases for practical reasons.

The testing for inventory was changed because bookkeepers are never going to be costing out inventory or, if they do, it will be under a CPA’s close supervision.

The testing for internal controls and fraud prevention was changed for a different reason. Once someone becomes familiar with the material, it is fairly obvious. As a result, the test questions ended up being so obvious as to be silly or focused on arcane details that no one needs to memorize, such as 15 ways to spot a fraudulent check. Once you have read ways to spot fraudulent checks, you will not miss them, but if asked to distinguish right answers from wrong on a multiple-choice test, you might struggle to interpret precisely the wording of the question.

The cost of certifying a bookkeeper, including the workbooks and testing at Prometric, is $479 for AIPB members and $574 for non-members.

The pros and cons of using CBs

Should you use CBs in your firm? That depends on your clientele.
CPA firms that have small-business clients benefit most from using CBs because certification essentially trains bookkeepers to do the write-up work, freeing billable hours for work at much higher rates, such as consulting, tax planning, business planning and so on.

CBs would be of little help to a CPA firm whose practice is tax preparation because CBs have no training in this area.

Similarly, if your clientele is larger corporations, you will be dealing with accounting departments headed by a CPA, so CBs would be of little use.

Small-business clients

CPA firms with small-business clients can use CBs to do much of the lower-level, lower-paying, yet essential day-to-day work for clients.

For example, Brent Johnson, partner-owner of Jungman, Elly, Williams & Johnson, PC, in San Antonio, a CPA firm that specializes in small business, sends out Wendy Fies, CB, to clients’ offices to do their payroll or correct payroll problems before quarterly reports must be filed. Fies also goes from client to client straightening out bookkeeping problems and helping them with end-of-period adjustments.

“Certification allowed us to give her more responsibilities,” Johnson says. “We now send her out to new clients to set up their books.”

Yet there are excellent bookkeepers who are not certified and may not need to be.

Jeff Oster, a partner at Margolin, Winer & Evans, LLP, in Garden City, NY, said of Elizabeth Wall, CB, who worked for his firm: “Ms. Wall was good before she became certified. The designation makes her feel better.”

If appearance matters — not every firm cares about this — CBs can enhance a firm’s image. Telling small-business owners that they will be dealing with a Certified Bookkeeper can offer the same kind of confidence that they get from dealing with CPAs.

Les Nosal, CPA, Nosal, Jones & Company, PC, in Omaha, Neb., a CPA firm, commented in an article published in Internal Auditor that he liked telling small-business clients they would be dealing with the firm’s CB because “I feel they perceive value.”

Hiring CBs vs. certifying current bookkeepers

Because bookkeeper certification is still relatively new, CPA firms may not find many CBs available in their geographical area, so it may be easier to have their current bookkeepers certified. This requires having the bookkeeper(s) simply obtain the workbooks and go through them, practicing the quizzes on which the national exam is based. Most of the workbooks have as much reinforcement material — quizzes and explanations — as text. The vast majority of CBs prepared on their own.

But for those who need the structure of a classroom, there are more than 150 college and university CE programs that offer a certification prep course using the same workbooks. In addition, there is an online course offered through another 150 colleges and universities.

The franchise division of the Horne Group, LLP, one of the 50 largest CPA firms in the country, operating in Alabama, Tennessee, Mississippi and Louisiana, is encouraging all of its bookkeepers to become certified, “both to enhance their skills and to achieve the recognition they deserve,” said Suzanne Eubanks, CPA, a partner in a section of the firm that does a lot of write-up work.

CPA firms considering certification should know that not all bookkeepers who start certification complete the process. One northeastern firm with seven bookkeepers was appalled that it could not get its bookkeepers to successfully complete the course of study.

But virtually all firms whose bookkeepers have undertaken certification have found that whatever portions the bookkeeper completes — adjusting entries, error correction, payroll, etc. — benefit the firm.

Steve Sahlein is co-president of the American Institute of Professional Bookkeepers. Visit their Web site at www.aipb.org.

This content has not yet been Rated.

To Rate content, please Login.