Choosing a CPA Who Can Get You Bonded

Why the choice matters at all

A surety is extending credit against your financial statements. Two CPAs can take the same underlying books and produce statements that support noticeably different programs — not through anything improper, but because construction accounting involves judgement calls, and a CPA who has made those calls for contractors before makes them in ways an underwriter recognises.

The failure mode is not fraud. It is a competent accountant, unfamiliar with the industry, producing a technically correct statement that answers none of the questions an underwriter brings to it.

The three questions that sort it out

• "Do you prepare contractor statements on percentage-of-completion?" This is the one. Completed-contract and cash-basis accounting distort a construction balance sheet, and sureties expect percentage-of-completion. A hesitant answer here settles the question.
• "Will the statements include a WIP schedule that reconciles?" The work-in-progress schedule is the most-read document in a surety submission. It should tie to revenue on the income statement and to the billing positions on the balance sheet.
• "Will you speak to my underwriter if they have a question?" A construction CPA says yes without thinking about it. That willingness routinely saves a week.

What else to look for

• Actual contractor clients. Ask how many, and at roughly what size. A firm with a real construction practice knows what your surety will ask before it asks.
• Turnaround on interim statements. Sureties want current numbers, not just annual ones. A CPA who takes two months to produce an interim is a bottleneck on every bond you need quickly.
• Familiarity with the assurance ladder. They should be able to explain what moving from compiled to reviewed to audited would cost you and buy you, in your specific situation, rather than selling you the top tier by default.
• Industry involvement. Construction-focused firms tend to belong to industry bodies and know the local surety market. It is a reasonable proxy, not a requirement.
• Willingness to advise before year end. Most of what helps your balance sheet has to happen before the books close, not after.

The choices that quietly cost you capacity

Sureties do not read a balance sheet at face value. They adjust it, discounting assets they cannot count on in a pinch, and the result of that adjustment is what your program is built from. A CPA who knows this presents the same facts far more usefully.

• Related-party receivables. Money owed to the company by an owner or an affiliate is commonly discounted heavily. Left unlabelled and mixed into trade receivables, it invites a question about the whole balance.
• Aged receivables.Old balances get written down in an underwriter's adjustment. An ageing schedule that shows the book is current protects the good balances.
• Non-construction and personal-use assets. Assets not working in the business tend not to support bonding, and their presence unexplained raises questions.
• Current-versus-long-term classification. Working capital is current assets minus current liabilities, so how items are classified moves the number a surety leans on most. This should be deliberate and defensible.
• Unexplained swings. A large distribution, a one-off loss, or a change in method is fine — unexplained, it becomes the thing the underwriter fixates on. A footnote costs nothing.

Talk to your broker before you engage anyone

The most common expensive mistake is commissioning a level of statement nobody asked for. Before you sign an engagement letter, find out which level your program actually calls for. An audit bought speculatively, when a review would have done, is money that could have stayed in working capital — where it would have supported capacity directly.

We are not accountants and do not prepare statements. What we can do is tell you what your markets will want to see at the size you are aiming for, and what an underwriter will stop on in the statements you already have. Send us your current numbers and a WIP schedule, or start a contract bond quote. This is general information, not accounting or tax advice — your CPA advises on your books. Underwriting always applies and we never promise guaranteed approval.