Below are five key steps to the creation of a PCA and the supporting practice procedure and operating documents that will reasonably allow your PCA partner the best opportunity to step in for you, if need be, and provide a degree of continuity keeping the trust and confidence of your clients.

Step 1: Establish a Practice Profile

Create a clear and concise set of practice procedures and operating documents. Remember, your PCA partner is not clairvoyant and he or she will need more than their intuition to figure out how your practice operates.

Author a detailed profile of the practice, including types of services offered, names and responsibilities of key employees, location of accounting records or files, your firm’s bank account information, and location of all lease agreements and contracts currently active and appropriate PIN numbers and passwords.

Create a client list that will include key contacts, contact information such as telephone number, email address and street address, etc. This information may be available through your software programs but we strongly suggest it be available in hard copy in the event your programs cannot be accessed for any reason whatsoever. Also list the specific services required and important deadlines, not just the obvious deadlines, but deadlines that are specific to the client’s business or personal needs. It is also a good idea to note any other special service requirements or other important information specific to that client.

Disclosure of procedures for WIP, enabling the determination of work not yet completed. How do you typically bill a client? Is it on a monthly basis, when work is completed, percentage of completion? Remember firms operate differently and you must help your PCA partner understand how your firm operates.

Prepare a technology guide for your PCA partner that enables them to access and use your firm’s computers and/or software systems. DO NOT FORGET to include passwords. (This is why we suggest the hard copy files also be made available).

Detail the location of workpapers and client records. Do not forget to disclose the location of files stored off-site, whether it be in the Cloud or a secure file storage facility.

Provide a detailed description of your firm’s filing system. Who, what, where and how are the key words to focus on when authoring this description.

What are your firm’s office procedures for handling client information including receipt and return thereof? Prepare a description of the procedures.

What are your firm’s billing schedules and collection policies? One of the main purposes of a PCA is to provide continuity for the clients. Obviously receiving invoices and the expected amounts therein will instantly get a client “out of their comfort zone”, if it is different than expected.

Part of your PCA operating procedures must identify and disclose how you currently handle all accounts payable.

Your Practice Profile should be updated at least annually and shared with your PCA partner.

Step 2: Choose the form of practice continuation agreement or arrangement

There are three major forms of a PCA and one major source of assistance. Below we have identified those for you. Please keep in mind there are other forms available but we have chosen the three major types and forms.

Step 3: Identify and Approach Suitable Firms/Partners

Below is a checklist of items to consider, analyze and once you believe you have your PCA partner identified:

Professional and Practice Continuity – Does the potential PCA partner firm have:

PCA Longevity – Does the potential PCA partner have:

Chemistry – Does the PCA partner have:

Excess capacity – Does the PCA partner have:

Step 4: Implement the agreement or arrangement

This is not a “do it yourself” situation, please have experienced counsel or an M&A accounting consultant assist in the process and draft the agreement. When completed it is very important to:

Step 5: Check in with the firm at least annually to make sure it is still willing and able to carry out its obligations and to update your PIN codes and other information.

We suggest a review be performed a minimum of every 12 months. In advance of this review, prepare a series of questions that will help you identify any internal changes to the firm of your PCA partner that might give you cause for pause to continue the arrangement. Your PCA partner may still be ready and willing to act as your PCA partner but they may no longer be a good match. This happens often as firms adopt different niche services, make commitments to expand outside their current geographic location, the partners age, the staff changes over, or they no longer provide a service that is important to you.

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