Not All Accountants Are Created Equal

Funny, isn’t it, how we just naturally think that if someone says they belong to a particular profession, then they are the same as others in that profession. It’s possibly worse with the accounting profession than many other professions perhaps because so little is known about the profession.

Is it because accountants are more secretive than other professionals? I don’t think so. Actually, I wonder if it’s more to do with the fact that few people have a grasp of what accountants do. And, of course, the preparation of accounts involves numbers, and many people are put off numbers at school. Or perhaps numbers are just not their thing. Either way, they regard numbers as a closed book and want it to stay that way.

And then there are the people who have been put off accountants by someone who called themselves an accountant but provided a less than professional service. Maybe that’s because not all accountants are created equal?!?

Before I go further, I must point out some reasons for the confusion that’s out there.

Wannabees

Firstly, there are people who call themselves, who quite simply are not! They have no (or incomplete) qualifications, and likely as not do not belong to the appropriate professional body. This means, of course, they are not accountable to that body for the quality of the service or product they provide (I’m talking financial statements and traditional accounting advice here).

The one advantage they have to the business owner is that they are cheaper (than a ‘real’ accountant). However, this cheapness comes at the cost of:

• Not being sure they are claiming all the right expenses;
• Not being sure they are getting your taxes right; and
• Having no professional body you can claim on, should things go wrong.

There is also little, if any, chance that they can be relied on to give advice. (I’ll refer to the types of advice a business owner might need later.)

Examples I have come across of the work of these people include:

1. Financial statements that did not add up. By this I mean:
2. Example A: The increase in retained earnings in the Statement of Financial Position (=Balance Sheet) did not equal the Net Profit for the year in the Statement of Financial Performance (Profit Loss).
3. Example B: A Depreciation Schedule that did not reflect the same net fixed assets as the Statement of Financial Position.
4. Personal expenses were claimed in the financial statements which were not tax deductible and led to significant problems with the Tax man.
5. Tax-deductible expenses were not claimed in the financial statements, meaning the business owner was paying too much tax.
6. Balances in the Statement of Financial Position that could not be reconciled to source documents — e.g. bank balances.

Needless to say, the cost of these issues exceeded any ‘savings’ the business obtained by using a Wannabee (as I call them). I’m not saying all Wannabees are bad. Some might be good bookkeepers. But that doesn’t make them accountants.

These people might call themselves Public Accountants, or Tax Accountants, but if they are not a member of the appropriate body, if they are not entitled to call themselves CPA, or CA, or whatever is appropriate in your country, well I think the above says it all.

As Jala Talabani says:

Titled

Some organizations have position titles for employees that include the word ‘accountant’. The bearer of this title is not necessarily an accountant. Often, in fact, the role is not actually related to accounting, nor does it require the bearer of the title to be one. It’s quite likely that the role could be viewed, by those who are not that way inclined, as being just a boring (*) as accounting.

Comedienne Ellen DeGeneres says:

(*) It’s not boring!

Qualified

Some of these people may be Wannabees or even Titled. But, if they only have the degree and are not members of that professional organization I keep mentioning, then they are not all the way there yet.

You see, to get to that membership, there are a whole bunch of hoops they have to jump through. They are not easy, and perhaps they’re not all really necessary, or even the most needed hoops, but they are there to ensure an outcome. And the outcome? A professional who can be relied on to provide work to a high standard.

If they are working towards membership of the relevant professional body, under the tutelage of a qualified, experienced member (*) and using recognized appropriate tools and databases, then that’s great. That should mean their work is checked by their tutor (*), so you can rely on it.

(*) This is one of the hoops I mentioned above.

Despite being qualified, I have seen people who:

• Were unable to reconcile a general ledger account,
• Struggled to understand financial statements, and
• Didn’t seem to be able to learn from past mistakes.

There’s a difference between being able to pass exams/achieve qualifications, and being able to do the practical work a job requiring those qualifications requires. You can train knowledge (and, even attitude — although that doesn’t usually happen at University), but aptitude (natural ability) comes with the genes.

As Dr. Marc Dussault says:

Others would argue attitude is everything, but the reality is that certain personality traits are definitely key in enabling the performance of many tasks. If a task requires logical thinking, then a person who is not that way inclined is likely to (at least) struggle. If it requires persistence as well, they are likely to struggle even more.

Accountant

We’ve finally arrived. Real accountants have gone through all the hoops I’ve mentioned, been accepted into the appropriate professional body, and should be relied on to provide a professional service to a high standard. Their membership of that body requires them to keep up to date — with hours of professional development required of them every year.

If they are offering accounting and taxation services to the public, the professional body has standards that must be maintained, and which the body audits on a regular basis. They need to be on top of things like:

• Taxation legislation — what can and can’t be claimed, how the many types of tax returns must be completed, and when they must be filed with the tax man;
• Accounting standards — how the financial statements for your entity must look, and what they must show.

These accountants should be relied on to provide sound advice as to taxation structure — how to structure your assets holdings, and even deals, to maximize tax deductibility. Legally, of course. They should also be your first port of call when you go to buy an investment or start a business. And you should look to them for help with business budgets.

Bob Newhart puts it this way:

Albert Einstein went further:

Advisor

There is a sub-strata within the accountant group who take their offering to another level. These are the accountants who, running a good business themselves (*), offer business advice to clients, or to their employer.

(*) Sad to say, not all accountants can be said to do this.

This is the accountant you can turn to for business advice. They will help you develop your business plan, coach you in how to achieve it, and downright nag you (if necessary) to help you achieve what you set out to do.

They can help with advice on how your business should operate — both as to structure and layout — and what systems (physical and computerized would be a good fit for your business. And they even know a bit about marketing. Best of all, they know enough about business to know when you need to bring in (other) outside help, and (usually) have the contacts you need to bring in. Of course, you first need to accept their advice.

Logan Pearsall Smith wisely said:

I think by now you will appreciate that not all accountants are created equal!