[We need to make sure that anyone reading this article understands that we don’t fault Indiva Advisors, LLC. In fact, Jessica Velazquez, CPA, their Managing Partner and I had a very cordial conversation this afternoon. We discussed the difficulties for an out of state CPA firm to become licensed and deal with taxes in California, and a number of issues related to CPA’s providing services to the cannabis industry in California. You can read more about those challenges here, here and here. We wish them much success].
We view CCIA’s selection of an “Official CPA Firm” in poor judgment in selecting a single firm, where the goal should have been to raise the competence of the entire CPA profession in serving the cannabis industry”
CCIA’s focus should be on improving the overall quality of the professional skills of CPA’s that service the cannabis industry in the entirety, rather than seeking to glorify a particular firm.
We have expressed our overall thoughts in Cannabis – Gumballs Bad Combination where we stated
- Licensed Professionals -The development of a significant pool of licensed professionals, particularly attorneys, certified public accountants, enrolled agents [yep, that group that I poke at all the time is critical here assuming that they have the requisite thirty hours or accounting], and scientists [my term for the chemists, healthcare, and others with graduate-level degrees and professional licenses that are critical to demonstrating the integrity of the industry to the regulators.
Our view is that CCIA has once again, continued with its “pay to play mentality” and while we don’t know the arrangements between CCIA, and the Indiva Advisors, we certainly have our thoughts. We believe that Indiva will learn from this experience. However, we can’t say the same for CCIA, and we find it very difficult to justify supporting a trade organization that undertook deliberate steps NOT to broadly support the CPA profession, perhaps out of ignorance.
Our efforts to support the industry have included –
California Cannabis Chek
Building Confidence in the California Cannabis Industry
We have undertaken a focused effort to leverage the unique skills that certified public accountants possess to facilitate building confidence in the California cannabis industry as CA Cannabis Advisors. We have developed California Cannabis Chek TM which is comprised of a SaaS software application, technical resources, training, and ultimately a certification process for CPA’s. The process is ground in core attest concepts which have been developed by the CPA profession including:
Agreed-Upon Procedures Reporting – SSAE 18, Attestation Standards: Clarification and Recodification(effective May 1, 2017), principally as AT-C section 215
The standards contain a Maturity Framework for the evaluation of internal accounting controls over cash:
Level 1: Unreliable. The unpredictable environment for which controls have not been designed or implemented.
Level 2: Informal. Controls are present but inadequately documented and largely dependent on manual intervention. There are no formal communications or training programs related to the controls.
Level 3: Standardized. Controls are in place and documented, and employees have received formal communications about them. Undetected deviations from controls may occur.
Level 4: Monitored. Standardized controls are in place and undergo periodic testing to evaluate their design and operation; test results are communicated to management. Limited use of automated tools may support controls.
Level 5: Optimized. An integrated internal controls framework with real-time monitoring by management is in place to implement continuous improvement. Automated processes and tools support the controls and enable the organization to quickly change the controls as necessary.
The complexities of evaluating and reporting on internal controls, privacy, and other Agreed Upon Procedures is an attest function. The performance of attest services is specialized and required significant education and training and is RESTRICTED by the California Board of Accountancy [and every other state and territory in the US to CPA’s]. Enrolled Agents are NOT authorized nor capable of performing such work. If you observe an Enrolled Agent representing that they can provide such services, they should be immediately reported to the State Board of Accountancy, and the Internal Revenue Service Office of Professional Responsibility.
CPA’s and Attorneys with proper, verified eduction such and an LLM or MST in taxation are additionally uniquely qualified to address the tax, accounting, and regulatory compliance needs of Cannabis businesses in California. We have begun the discussion with the California industry regulators, tax authorities, and the profession about leveraging the unique skills of CPA’s to assist the industry. Engaging with FinCEN and other regulators is on our short-term roadmap. Let’s improve the skills for the choice of CA Cannabis Advisors.
CCIA Selects Indiva Advisors – Official CPA Firm