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Personal Financial Planners' Challenges

Guest Author - Consuelo Herrera, CAMS, CFE

In this volatile economy each one of us is confused, not knowing what to do with our investments, savings, if any, and how to maximize our scarce resources. Problems become a great opportunity for those who have a competitive advantage. Certified Public Accountants, CPAs, are in a privileged position to serve others by providing assistance as financial advisers in this troubled times.

The AICPA, American Institute of Certified Public Accountants clearly defines the scope and guidance applicable to these types of engagements. Personal Financing planning are services provided to develop strategies and suggest action steps that will lead our clients to achieve their personal financial goals.

If for instance, your client’s financial goal is to enjoy an early retirement or to maximize tax deductions, those engagements fall under the label of personal financial planning. Every CPA providing them should be aware of the AICPA guidelines and comply with them.

The starting point is the AICPA Code of Professional Conduct. Worth to highlight are the following rules:

o Rule 102, Integrity and Objectivity, which involves being free of conflicts of interest and not making misrepresentations of facts.

o Rule 201, General Standards, which involves the professional competencies that an accountant must hold when delivering services, including due care, adequate supervision of staff, if any, gathering of sufficient and relevant data that supports a recommendation or conclusion.

o Rule 301, Confidential Client Information. It involves disclosing information only with the client consent.

As directed by the AICPA, accountants should define the objectives of a personal financial planning engagement. To reach these objectives, it is important to understand the client’s financial goals and how to meet these expectations and needs.

Before undertaking an engagement it is necessary to reach an understanding with the client so that no gap expectations result for lack of proper communication. If in the course of the engagement, the accountant becomes aware of situations that his or her client should be aware of, even if not stated in the engagement letter, it should be brought to the client’s attention.

Accountants are expected to take steps that prevent them for getting engaged with individual lacking integrity. For example, since money laundering is pervasive in today’s world making sure that you know your client as to where his or her money does come from, is it justified by a legal business, does it reflect a reasonable relationship between a client’s activities and his or her cash flow? Knowing your client is a must that is never emphasized enough.

Other aspects that form part of understanding clients are: client’s family situation, commitment to the planning process, current cash flow and assets available.

Prior to providing suggested actions, a CPA has performed analyses and other procedures that will support the recommendations made. Analyses include qualitative and quantitative information. For instance, non-financial data includes client attitude, risk tolerance, family considerations, health, age, and life expectancy. Factors such as market conditions and interest rates have an effect in financial planning as well.

As part of this increased need for professionals ready to provide qualified services not only to the business community but also to clients seeking advice for coping properly with this fast-paced and unpredictable economic environment, the AICPA launched a new credential in May 2008. The Institute describes this credential as follows: a credential in forensic accounting, Certified in Financial Forensics (CFF), combines specialized forensic accounting expertise with the core knowledge and skills that make CPAs among the most trusted business advisers. The CFF encompasses fundamental and specialized forensic accounting skills that CPA practitioners apply in a variety of service areas, including: bankruptcy and insolvency; computer forensics; economic damages; family law; fraud investigations; litigation support; stakeholder disputes and valuations. To qualify, a CPA must be an AICPA member in good standing, have at least five years of experience in practicing accounting, and meet minimum requirements in relevant business experience and continuing professional education.

Personal financial planning is a need that has to be fulfilled diligently. Forensic accountants are sensitive to these needs.
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Content copyright © 2015 by Consuelo Herrera, CAMS, CFE. All rights reserved.
This content was written by Consuelo Herrera, CAMS, CFE. If you wish to use this content in any manner, you need written permission. Contact BellaOnline Administration for details.


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