By: Greg K. Bryant, Managing Partner
I am sure we have all heard or used the above phrase. In the world of cost segregation, the use of the name or term “Engineer” has gotten a particular firm in trouble with the Louisiana Professional Engineering and Land Surveying Board. This firm has been notorious for making false and misleading statements about their qualifications and credentials, stating repeatedly that they were engineers and/or an engineering firm.
By way of reference, each state governs the licensure of engineers and the pathways to obtain what is considered in the engineering world to be the Holy Grail – the Professional Engineer (P.E.) designation. In most cases, a P.E. is the only person who is authorized to stamp drawings and approve certain design documents. Along with this designation comes a tremendous responsibility for duty of care and ethical conduct. Many states require that P.E.s make up at least some of the ownership of an entity, while some require majority ownership. What remains constant, though, is that in order to be a full-fledged engineering company, a firm needs to have a P.E. somewhere in the ownership structure.
We suspect the reasons the state of Louisiana found the practices of the firm so offensive were due to its blatant disregard for ethical behavior when dealing with the public. There is an expectation by those not well versed in the industry that when they see the terms “engineer” or “engineering” they are dealing with an actual engineering firm. Unfortunately, this was not the case for the cost segregation firm in Louisiana. The misuse of these terms, coupled with a plethora of false and misleading sales and marketing items distributed by hundreds of part-time and untrained independent sales representatives meant that this firm set themselves up for the disciplinary action they received. One can only speculate as to whether Louisiana’s current and limited enforcement action will be the end of the story or whether officials in other states will take note, as most states take these issues very seriously.
In the cost segregation industry this is significant. The IRS makes reference to engineered-based approaches in the performance of cost segregation studies as being more reliable and accurate. It also goes on to discuss the credentials of those performing the studies (See Audit Techniques Guide for Cost Segregation Studies). Tax professionals and potential clients would be well served to evaluate the credentials of any firm and its employees who will be assigned to perform a cost segregation engagement. Any reputable firm would be proud to send you the resumes of their P.E.s (we have three on staff), degreed engineers, project managers and construction estimators.
Another important designation to consider is membership in the American Society of Cost Segregation Professionals. This national organization was established in 2006 to develop standards for technical accreditation, ethical conduct and education for our industry. Owners and tax professionals are strongly advised to seek the services of a firm that employs ASCSP Certified Members, which is the highest designation the association confers. (Bedford is also proud to have several Certified level members on staff.) Without such accreditation, it can become very challenging for an owner or tax professional to know if they are getting what is advertised and what they are paying for.
In today’s environment, it is essential to undertake appropriate enquiry to ensure that you are getting the credentials and caliber of firm you were expecting. For those firms who have been stretching the truth or flat out misleading the public, the image of the Wizard of Oz comes to mind. It’s time for the man behind the curtain to step out and be seen for what he really is.