CPA Firm Partnership Playbook

Features

• Complimentary Resources
  • Year end tax planning opportunities guides to seamlessly integrate LIFO into year end tax planning
  • Guides & training to educate CPA firms & clients about how LIFO works, best practices & planning strategies
• Complimentary Offerings
  • Companies not on LIFO: Election benefit analysis
  • Companies on LIFO: Best practices & review, including comparative and pro forma calculations
• Turnkey Outsourcing Solutions
  • All clients receive LIFO PDF report package containing all amounts required to book LIFO AJEs & tax return entries
  • Services include all aspects of LIFO, including:
    • Annual LIFO calculations & interim estimates preparation
    • Bureau of Labor Statistics Consumer/Price Index category assignments (BLS CPI/PPI) for companies using IPIC method
    • §263A UNICAP costs for Schedule M tax return entries
    • Book vs. tax LIFO schedules for Schedule M tax return entries
    • Accounting method changes & error corrections
    • Pro forma comparisons of present vs. proposed methods
    • All LIFO-related IRS forms & statement preparation
  • Flexible engagement formats
• Software licenses
  • Automate all aspects of the LIFO calculation other than Bureau of Labor Statistics category assignments
  • Automated LIFO report package preparation

Benefits

• Seamlessly integrate LIFO election scoping into year-end tax planning without having to develop and maintain in-house resources and expertise
• Turn LIFO into a tax-savings tool rather than a compliance nuisance by offering high-quality, low-cost outsourcing that makes LIFO as simple as possible
• Create a profit center from LIFO services and grow firm revenue by obtaining LIFO outsourcing at wholesale costs and reselling to clients at retail rates
• Enhance value proposition to prospective clients by offering tax savings opportunities such as LIFO that aren’t offered by competing CPA firms (or offer comparable/superior LIFO solutions with competing firms)

LIFOPro Outsourcing Engagement Process Flow: First Year

LIFOPro Outsourcing Engagement Process Flow: Recurring Annual Calculation Services

LIFOPro + CPA Firm Partnership Process Flow

Most efficient approach is to segregate your existing clients into the following groups:

• Clients or prospective clients with inventory who are not on LIFO
  • Should be targeted in conjunction with year end tax planning
  • Outreach should occur to perform LIFO election scoping & offer client complimentary election benefit analysis
  • Although outreach can occur post year-end, most ideal timing is 1 – 3 months prior to year end:
    • Allow client sufficient time to scope out LIFO election
    • Ensure LIFO conformity rule compliance which requires for face of the income statement to be presented on a LIFO basis (not applicable if client does not issue financial statements to third parties such as banks & shareholders)
• Clients or prospective clients who are on LIFO
  • Can be targeted at any time since a preexisting need exists to annually perform the LIFO calculation
  • For December year end clients, post 4/15 is most ideal so the client has sufficient time to explore outsourcing options & applicable changes recommended by LIFOPro

• Identify firm clients that are already using the LIFO method
• The following outreach steps should be performed:
  • Client should be informed that your firm has partnered with a LIFO subject matter expert that provides a turnkey outsourcing solution (or your firm has enhanced the LIFO service offerings to include a turnkey outsourcing solution)
  • Client should be informed that the LIFO service provider or your firm’s new service offerings makes LIFO as simple as possible
  • Client should be informed that they can obtain a complimentary best LIFO practices & review report, sample LIFOPro report package & turnkey outsourcing solutions fee quote
• Outreach/analysis sequence is flexible to best suit the wants/needs of your firm/client
  • LIFOPro offers to host a complimentary discovery call with the client and/or CPA firm (presentation can be tailored to exclude any discussion regarding fees if CPA firm is engaging LIFOPro directly & using wholesale-retail model)
  • Some firms/clients may prefer to obtain the LIFO election benefit analysis prior to having discovery call or may opt out of having a discovery call altogether
  • Firms are welcome to host their own discovery calls with clients without LIFOPro present
  • LIFOPro’s discovery call presentation slide deck: LIFOPro’s Offering Presentation Slide Deck
• Outreach steps will likely depend on the CPA firm’s partnership format with LIFO
  • Firms directly engaging with LIFOPro (wholesale-retail model) may internally manage the outreach/analysis process to preclude the need for LIFOPro to communicate with their clients
  • Firms indirectly partnering with LIFOPro will likely connect their client with LIFOPro so the firm or LIFOPro can coordinate scheduling/hosting a discovery call and remain involved/aware regarding the progress of the LIFO analysis process
  • Other firms may prefer for LIFOPro to manage all aspects of the outreach/review process and will only need to provide an introduction or referral to their client/LIFOPro

• Clients who are 2025 Top LIFO Election Candidates & interested in exploring a LIFO adoption should obtain a complimentary LIFO Election Benefit Analysis & outsourcing fee quote
• LIFOPro will deliver the client’s analysis report & fee quote to the firm and/or client within 1 week or receipt of required documents
• Benefit Analysis Report Overview
  • Comprehensive case study delivered as PDF report to assist CPA firm & client with the LIFO due diligence process
  • Series of historical calculations made to forecast company-specific long-term LIFO tax benefits
  • LIFOPro’s proprietary inflation scoring system used to model company-specific expected risks vs. rewards of LIFO
  • Election year LIFO tax benefit & estimated amounts included for booking a LIFO journal entry (if applicable, journal entry using benefit analysis amounts should be made so financial reports can be issued on a LIFO basis & LIFO conformity rule compliance is met)
  • Includes LIFOPro’s findings & recommendations regarding whether a LIFO election should be made/deferred, and the most beneficial submethods to use if a LIFO election recommendation is made
  • Also includes a comprehensive Appendix containing LIFO election essentials, accounting for LIFO & FAQs
• Fee Quote Overview
  • Provided at the same time the client’s benefit analysis report is delivered
  • Includes services to be provided, deliverables timing, document requirements & detailed fee quote breakdown
  • Provides separate breakdowns for the election year vs. recurring fee amounts
  • Provides separate breakdowns for the various LIFO submethod alternatives (if applicable; i.e., internal vs. external indexes)
  • Also provides separate line items for optional services

• LIFOPro offers to schedule & host a meeting or call with the firm and/or client to discuss the benefit analysis/review report results, fee quote and implementation/onboarding steps following the delivery of the client’s report and fee quote
• LIFOPro will collaborate as needed with client and/or CPA firm to provide additional best practices feedback, training & additional resources prior to entering into a formal engagement
• Firms directly engaging LIFOPro may choose to discuss results & fees with client directly and are not required to share benefit analysis/review reports and fee quotes with clients
• Firms with an indirect relationship with LIFOPro often elect to introduce the client to LIFOPro to facilitate direct communication between the client & LIFOPro
• LIFOPro will deliver the following items within 3 business days of request to proceed with an engagement:
  • Engagement letter (fillable PDF form)
  • Year end calculation document request (Excel file)
    • Includes separate first year & recurring annual calculation document request lists
    • Year end document request will typically include the following items (dependent on type of business and whether year end or interim documents were provided):
      • Year end inventory report from accounting system (aka item detail, stock status or inventory valuation report)
      • Year end balance sheet or summarized trial balance schedule listing year end balances of all inventory-related subledger accounts
    • Sample templates or previously provided documents included in reference to requested items to assist firm/client in preparing the requested items
  • New Client Questionnaire – Sheet included in document request Excel file. One-time onboarding form used to confirm delivery timing, contact information & IRS forms preparation

• Engagement Performance
  • Performance of the engagement typically begins after the year end has been closed, after the required documents to complete the calculation are available & as soon as the firm or client delivers the required documents to LIFOPro
  • Some firms/clients will send preliminary or unaudited documents to LIFOPro to expedite LIFO report delivery & facilitate quick closes. When this occurs, LIFOPro will revise and deliver updated or final LIFO reports at no additional cost if changes exist between the preliminary/unaudited and final/audited information provided to us.
• Deliverables: LIFOPro guarantees to deliver the following by or before firm/client’s required report delivery date):
  • LIFO report package (PDF and/or Excel reports) – Contains all information required for financial reporting, audit/review & tax purposes (including all LIFO-related amounts required to book journal entries & prepare year end financial reports and tax returns)
  • IRS forms package – If applicable; for companies making accounting method changes or first-time LIFO elections
• Reporting/Implementation: Client can complete all remaining LIFO-related tasks upon receiving the deliverables listed above, including:
  • Client records LIFO journal entry using amounts provided in LIFO report package
  • Client prepares year end financial report using amounts provided in LIFO report package
  • Client/CPA firm prepares LIFO-related entries on tax return using amounts provided in LIFO report package (and attaches IRS forms package to tax return if accounting method changes are being made)

Base module features

• Cumulative inflation index calculation (if applicable)
• Base year & LIFO layer calculation
• LIFO inventory, reserve & expense (income) calculation
• 263A UNICAP costs calculation (using client-provided absorption ratio)
• Full access to LIFO reporting module (view/print or save all reports as PDF or Excel files)
• Full access to LIFO interim estimate & ad-hoc forecasting modules (including LIFO Projection module that provides hundreds of LIFO reserve change amounts resulting from a pre-defined range of inflation indexes & inventory values)
• Full access to automated standard LIFOPro report package printing module (same module used by our team to prepare LIFOPro report package for outsourcing clients)
• Software database file containing all historical LIFO documentation (which ensures IRS LIFO books & records requirement compliance)
• Unlimited support & training
• LIFO calculation review & reasonableness testing

Internal index inflation calculation module features

• Current year inflation index calculation, including comprehensive reports providing supporting documentation
• Prior year unit cost lookup
• Automated new item prior year unit cost reconstruction
• Automated treatment of the following outliers & exceptions:
• Items exceeding user-defined price change criteria (CY vs. PY Unit cost changes exceeding specified percentage and/or dollar value)
• Unit of measure mismatches (items with different CY vs. PY units of measure)
• Automated loading of multiple Excel data input files and/or sheets

External index module features

• Automatic download of Bureau Labor Statistics Consumer/Producer Price Indexes (including preliminary and final indexes)
• Automatic download of BLS weights of relative importance for 10% method calculations
• Current year inflation index calculation, including comprehensive reports providing supporting documentation
• Automated interim estimates using most recently published BLS indexes (including estimates using PY product mix which precludes the need to prepare a current period schedule of inventory balances by BLS category)
• Automated replacement of deleted/discontinued BLS categories
• Automated 10% method calculation
• Automated IPIC pooling method 5% test calculation
• Access to LIFOPro’s complete list of Bureau of Labor Statistics CPI/PPI codes & descriptions (including references to replacement codes for all deleted/discontinued BLS categories)

License Terms & Conditions

• Software license is leased for one year period with optional annual renewal
• License cost includes the following:
  • Import of client’s LIFO layer history into LIFOPro software & creation of client’s LIFOPro software database file
  • Unlimited training and support
  • Version updates & upgrades
• Cost is per client, and volume discounts provided to CPA firms
• Provides access & usage for unlimited users
• Private cloud module includes the following:
  • Enhanced support
  • Automatic version updates & upgrades
  • Automatic downloads of BLS CPI/PPI
  • Automatic backup of your company’s LIFOPro software database files
• Coming soon: Alternative LIFO method inflation calculation module – estimated release date is early-mid 2026

Software License Fee Schedule

Complimentary Offerings

• Companies not on LIFO: Election benefit analysis
  • Non-dealerships
    • Current period & prior year end’s item detail or stock status report containing the following fields:
      • Item number (UPC/SKU) and description
      • Stages of production and/or hierarchies (if applicable; hierarchy examples include categories/class/type/line etc.)
      • Current period Quantity on hand or weight
      • Current period item/unit cost
    • Completed benefit analysis questionnaire (enclosed in benefit analysis document request list)
    • LIFO Election Benefit Analysis Document Request List & Questionnaire
  • Dealerships: Download, complete & return the applicable questionnaire to LIFOPro
    • Auto dealer LIFO Election Benefit Analysis Questionnaire
    • Machinery & equipment dealer LIFO Election Benefit Analysis Questionnaire (ag/farm & construction machinery)
  • Other dealerships (RV, powersports etc.): Contact LIFOPro for document requirements OR IF AVAILABLE, provide the same documentation listed above for non-dealerships
• Best practice & review (for clients already using LIFO): LIFO calculation documentation from the most recent two periods closed

Recurring Outsourcing Engagements

• Non-auto dealers:
  • Current year end item detail report
  • Summarized year end general ledger or trial balance schedule
• Auto dealers
  • Using alternative LIFO method: Invoices for all vehicles on hand as of current period & as of prior year end
  • Using IPIC method: One of the two schedules:
  • Summarized year end general ledger or trial balance schedule
  • Summarized year end inventory balances by the following types:
    • New cars
    • New trucks
    • Used cars
    • Used trucks
    • Parts
  • Dealers using net method: Supporting documentation of trade discounts, advertising expenses & other adjustments (if applicable; for dealers using net method)
• All clients
  • Completed New client onboarding questionnaire (first year only)
  • Executed engagement letter

• When do the required documents to complete the LIFO calculation need to be delivered to LIFOPro by?
  • Engagement begins when the required documents are sent LIFOPro
  • CPA firm or client can choose when to send us their documentation
• What is LIFOPro’s report delivery turnaround time? We can accommodate same-day turnaround time (standard time = 3 – 5 days)
• Should the client or CPA firm wait until the inventory figures have been audited or finalized prior to sending their documents?
  • Preliminary documentation can be sent if client has a small year end close window & needs to book LIFO journal entry ASAP
  • LIFOPro will update calculation & deliver revised/final reports at no additional cost
  • Companies can obtain revised LIFO reports including §263A UNICAP costs if the absorption rate is not immediately available
• Does LIFOPro have a Service Organization Control (SOC) Report?
  • An independent accounting firm annually audits our LIFO calculation service policies, procedures & systems for the period beginning January 1st and ending Dec. 31st
  • The accounting firm issues a SOC 1 Type II report which opines on LIFOPro’s calculation system, design & operating effectiveness of controls
  • A copy of LIFOPro’s SOC report is made available to all CPA firm partners & their clients (bridge letter can be provided)
• What are LIFOPro’s billing/payment policies?
  • Billing
    • LIFOPro email a PDF invoice 1 – 3 business days after delivering their LIFO report package; Standard payment term is due upon receipt, but can be modified to your firm or client’s needs
    • LIFOPro’s engagements are for a one-year period, but allow for optional annual renewal; LIFOPro’s recurring fee stated in the engagement is guaranteed to remain the same for a 3-year period, meaning the engagement letter is designed to survive for the first four years of the engagement (one year for first year fees stated in engagement & 3 years for the recurring fees)
  • Payment:
    • Physical check & electronic check: E-check offered at no additional charge (via CPACharge)
    • Credit card: 2.95% processing fee applies (via CPACharge)

Sample LIFO Election Benefit Analysis Report Excerpt #1

Sample LIFO Election Benefit Analysis Report Excerpt #2

Sample LIFO Election Benefit Analysis Report Excerpt #3

Sample LIFO Election Benefit Analysis Report Excerpt #4

Sample LIFO Election Benefit Analysis Report Excerpt #5