Maintaining a Consultative Environment

Organizational Structure of the Formal Consultation Process

Consultants

In order to foster appropriate informal discussions and formal consultations about accounting issues, "best practices" firms establish and maintain a consultative professional environment and organizational structure in which communication about technical accounting issues is encouraged.

"Best practices" firms' continuing education programs reinforce the message that engagement personnel, after completing their own research, should discuss accounting issues with others if they have any questions about the appropriateness of a client's accounting principles.

Maintaining a Consultative Environment

In "best practices" firms, informal discussions among engagement personnel and others in the practice office (and elsewhere in the firm) occur frequently, but they do not take the place of formal consultations on accounting issues.

Informal discussions may occur in face-to-face conversations, telephone calls, or electronic mail. They often are simply "reality checks" by engagement personnel who are looking for research guidance or confirmation of tentative conclusions formed on the basis of their own research.

"Best practices" firms encourage those types of informal discussions as well as formal consultations on technical accounting issues, when appropriate, so that personnel with more knowledge and experience are involved whenever engagement personnel believe it is necessary to seek advice from others on accounting issues.

Organizational Structure of the Formal Consultation Process

In a firm with a single office, management's decisions regarding how to organize the firm's formal consultation process are ordinarily straightforward. The firm's internal consultation resources, including the person designated "chief technical partner," are simply housed in that office.

In firms with multiple offices, however, management must make several decisions regarding how to organize the formal consultation process. Some multi-office firms' consultation processes are highly centralized geographically, with a "professional practice department" located in one office (often the firm's "national" or "home" office) or in a few practice offices.

Other multi-office firms have a regional or practice office focus in which consultation resources are more widely dispersed geographically; a smaller "professional practice department" with a few highly-experienced consultants and department management would then be maintained (often in the "national" office).

Regardless of the organizational structure of their formal consultation processes, all "best practices" firms develop policies and procedures so that:

• Engagement personnel provide sufficient information to consultants
  
• Engagement personnel receive appropriate technical support on a timely basis
  
• Consultants provide consistent advice on accounting issues to engagement personnel throughout the firm so that clients' use of accounting principles is supported by established sources of those principles, by analogy to similar transactions or events for which established accounting principles exist, or by other sources (for example, by the firm's position on accounting for new types of transactions or events)
  
• Engagement personnel receive updated information about emerging practice issues (and about the firm's position on them, if any)
  
• All personnel remain objective and independent of client pressures favoring particular consultation conclusions.

In "best practices" firms, all personnel with consultation responsibilities are designated by firm management. "Best practices" firms, particularly large ones and those with multiple offices, publish and distribute to all firm personnel updated information about consultation assignments and how consultants can be contacted, so that engagement personnel are informed about which personnel have been designated as consultants and about the nature of their consulting responsibilities.

Consultants

Consultants in "best practices" firms have knowledge and experience appropriate for the types and complexity of the issues on which they work. "Best practices" firms have policies and procedures by which engagement (and other) personnel can be identified as potential consultants.

For example, practice offices might nominate engagement personnel who have significant client experience handling accounting issues, have strong technical accounting skills, and have an interest in working extensively on technical issues. As another example, some firms recruit qualified partners and managers for tours of duty in the "professional practice department" to supplement a core group of permanently-assigned consultants.

Once identified, potential consultants in "best practices" firms proceed through an interview process to clarify the duties and responsibilities of the position and to enable consultation management to assess their suitability for the position. The final selection of individuals for consultant positions is approved by appropriate firm management.

Although much of a consultant's training is likely to be done through on-the-job experience, new consultants may need training in the use of specialized reference materials (such as those described in later sections of this report). "Best practices" firms provide continuing education opportunities to all consultants so that they remain current with accounting standard-setting developments and emerging practice issues. In "best practices" firms, policies and procedures for evaluating consultants' performance emphasize the quality of the advice provided.

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