DO I NEED A CONTROLLER IF I HAVE A CPA? ONE LOOKS BACK A YEAR, ONE LOOKS AT THIS MONTH.
Yes, for most subcontractors above about $3M. A CPA firm files the tax return and, if the surety asks, issues compiled, reviewed or audited statements once a year, months after the year closed. A controller reviews the books every month while the jobs are still open, which is the only time a fading job can still be fixed. The two roles work together, and a good controller makes the CPA's year-end work faster and cheaper.
Owners often think of the CPA as the person who checks the numbers. The CPA does check them, for a year that ended three to nine months earlier, and the CPA's job is to report what happened accurately and file the return. Pushing a project manager on cost to complete in March, catching an overbilled job in May or fixing the cost coding in July is outside that engagement. The controller does that work, every month, so the year the CPA reviews is a year the owner already understood.
WHAT EACH ONE DOES.
| Capability | Controller | CPA firm |
|---|---|---|
| How often | Every month | Once a year, plus tax planning |
| Looks at | This month, while jobs are open | Last year, after it closed |
| Main output | Closed books, WIP, cost to complete review | Tax returns and year-end statements |
| Can fix a fading job | Yes, while there is time | No, the job is usually finished |
| Independent of management | No, works for the owner | Yes, for reviews and audits |
| Works with the surety | Answers questions all year | Issues the statements the surety relies on |
| Tax strategy | Supplies clean numbers for it | Owns it |
| Where it goes wrong | No CPA review of the year | Year-end surprises no one saw coming |
EVERY MONTH, WHILE THE JOBS ARE OPEN.
A controller closes or reviews the books each month, reconciles the balance sheet, builds or reviews the WIP schedule and goes through cost to complete with the project managers. The owner gets a profit figure every month that matches what is happening in the field.
This fits a subcontractor whose year-end statements bring surprises, whose surety asks questions the owner cannot answer, or whose jobs end far below the margin the monthly numbers showed. It can be a full-time hire or a fractional service.
ONCE A YEAR, FOR THE IRS AND THE SURETY.
A CPA firm files the business and owner tax returns, advises on entity and tax strategy, and issues compiled, reviewed or audited financial statements when a surety or bank requires them. Those statements are an independent report, and the independence is the point.
Every subcontractor needs a CPA. A construction-experienced CPA who understands percent complete, the completed contract method and what a surety looks for is worth paying more for, because the year-end statements are what the bonding line is based on.
WHERE WE COME OUT.
Keep the CPA and add the controller function once the business is past the size where the owner can feel every job. A good controller sends the CPA a reconciled trial balance, a clean WIP schedule and support for every balance, which usually lowers the year-end fee and shortens the time it takes.
If your CPA also offers monthly accounting, ask who does the work and whether that person has built a WIP schedule before. Monthly bookkeeping from a tax practice is useful, and it is a different service from a construction controller review.
FREQUENTLY ASKED.
