tip of the month: Practice Continuation for Small Firms.

Here are some basic tips on how to get a practice continuation plan started before consulting a more comprehensive resource:

1. Create a checklist of important resources and phone numbers, such as your professional liability insurance carrier, state board of accountancy, and your state and local CPA societies. Other important resources may include your office building manager, computer technical help, telephone service and other utilities.

2. Assemble a set of practice and operating documents. These documents can be divided into sections, such as:

   1. A profile of the proprietorship, including types of services offered, names of key employees, location of accounting records, bank account information, and location of contracts and lease agreements.

   2. A client list, including key contacts, services provided and important deadlines. (This will need to be much more detailed if you are interested in the option of negotiating a buy/sell agreement as part of a contingency plan.)

   3. Procedures used to monitor work in progress. This will enable others to determine the status of uncompleted work.

   4. A guide to using the firm's computers.

   5. Location of work papers.

   6. Description of fialing system.

   7. Office procedures for handling the receipt and return of client information.

   8. Billing schedules and collection policies.

   9. Procedures for identifying and paying accounts payable.

   10. Location of personnel files.

3. Decide on a continuation arrangement/agreement. There are three basic types:

   1. A one-to-one agreement with a local CPA firm that you have identified as a good fit/culture for your firm. The agreement established between the firms should cover the critical areas that are necessary to ensure a smooth transition (both short term and long term) if it becomes necessary. The agreement usually has a buy/sell component with a clear formula for calculating the sales price of the firm, along with payment period and terms in the event of the CPA's permanent disability or death.

   2. A group agreement, in which several CPAs may act as successors/partners to each other's firms. CPA firm alliances or associations generally serve this purpose, among other purposes.

   3. A CPA society group that will assist the member, spouse or heirs in finding a successor/partner.

4. Identify, approach and partner with a suitable firm(s). Network among...