“With a poor choice of an accountant, we pave the path which leads our business into failure”¹
The motive for such a serious topic is the large number of clients whom we encounter in our line of work, and who come to us with a range of problems: misunderstandings with the accountant about business problems and their solutions, to the speed and accuracy of data required for business decisions, information about the news at the last minute, inadequate tax treatments of business changes, and let us not list anymore.
Well, in such a situation, it is inevitable to ask ourselves whether the problem always lies with those who manage the business, or there are among us accountants those not capable of performing the duties that our profession requires of us, and unfortunately often also those who believe that it is sufficient to complete a shortened training program for both their profession and the programs they use for their work.
We must take into consideration that there are always two sides of the same coin, but what about the opposite side of the accounting mirror? Based on the complaints we had the chance to hear from the clients who had negative experience, some of the characteristics of poor accountants became apparent, conditionally speaking.
The task of accounting is to make records of all business events and transactions, more precisely the chronological record of business changes on the prescribed accounts of income, expenditures, assets, liabilities, etc. provided that, at the beginning of the cooperation, you had explained your business activity, more precisely the entire process of production, sales, provision of services or whatever it is that you do. If the accountant does not understand your business well enough, they will record the business changes on inadequate accounts.
The consequences of poor posting may affect the poorly determined business result, which can further lead to either unrealistically higher tax liability (which is causally related to the corporate income tax for the following business year) or unrealistically low tax base, which the tax authorities can interpret in different ways in accordance with the Law on Tax Procedure and Tax Administration. This may cause issues with the tax authorities and, over time, may have a significant impact on your company’s financial stability.
Calculation of various fees which are treated as company expenditures
Miscalculation – incorrect calculation of costs such as procurement costs, inventory costs, sales costs, can lead to incorrect financial statements. Here we have also encountered a number of issues regarding employment, calculations of paid leave benefits, failure to check the provisions of the contract, which ultimately resulted in a loss of revenue for the company due to the initiation of labour disputes.
Lack of promptness
If you submitted the required documentation in accordance with the Law on Accounting, but your accountant lacked promptness, this caused a delay in the payment of liabilities, as many of the people who contacted us pointed out – improper management of finances and accounting cannot provide accurate information on the status of liabilities to suppliers. This leads to delays in paying bills to suppliers or other business partners. They pointed out that as a result, they lost several business partners.
Few clients have entrusted their payments to accountants.
Having spent 33 years in the accounting, business, and legal waters, I am at a loss for a rational explanation for these actions of my colleagues. It resembles sticking our hand in another person’s pocket. The possibility of misunderstanding of the order of payment of liabilities can be interpreted as misuse. It does not necessarily mean that they will utilize it, but it is necessary and practical to set limits on the payments that accountants can make for you, if you have decided on this “arrangement”.
Loss of reputation
A certain number of clients stated that poor management of finances led them to make mistakes that affected the quality of their services or products. This resulted in the loss of clients and reputation.
Some client experiences indicated that there was lack of efficiency, more specifically, the information provided by the accounting analyses was not available quickly enough, which was essential for making business decisions. This led several to missed opportunities that decreased the potential business result.
How are those characteristics acquired:
– primarily through inadequate education,
– by not knowing the regulations, not following the regulations,
– by understanding accounting as a necessary evil, which serves only the purpose of meeting the deadlines,
– by not understanding the essence of accounting as a chronological science,
– by not understanding the uniqueness of each business entity that has its own path, from establishment to development and business branching,
– through superficiality as a result of semi-education
– by the conviction that knowing of one of the information programs is sufficient and that it is “automatically posted”…
– the non-competitiveness of prices, the height of which is directly proportional to the invested knowledge and effort, and much more.
The right side of the coin – the accountant
It is often forgotten that the accountant is the most important business partner of a company. That is why the statement of the Committee of Public Accountants that accounting is a skill is very accurate. A competent accountant has a good knowledge of legal regulations and knows how to recognize, understand and utilize legal inconsistencies. They use their skill to help not only with maximizing the financial performance, but also play a key role in facilitating the making of the correct business decisions.
The CREATIVE FINANCE TEAM is striving to obtain an accurate image of your business by asking a ton of questions, to assist you in noticing the business changes, and to provide you with information that will help in the future decision-making.
We are a TEAM that primarily takes a very responsible approach to accounting, but also to the legal, tax and financial segments of our clients’ business.
Accounting is a skill – a “Hierarchy of Skills”²
At which level is your accountant?
Is accounting a necessary evil or a good investment?
Make the judgement for yourself …
¹Brian Tracy “Golden Rules of Success”
²Igor Kokcharov, PMP Head of Product Development, SimulTrain®
at STS SA, Switzerland