ALL ACCOUNTANTS ARE THE SAME AND OTHER POPULAR MISCONCEPTIONS!

First of all let me get one thing straight: the purpose of this article is not to defend accountants for any wrongdoings they have penetrated against businesses and individuals over the years.

The purpose of the article is to explain how some negative generalisations about accountants came about, examine whether they are justified or not and suggest ways to protect the business owner.

One common negative generalisation is that: "All accountants are the same!"

Being one of the lot (accountants), and being in the profession for about fifteen years, I will not deny that some accountants have not risen to the occasion or heve not given some businesses an efficient service in exchange for their money.

I' m afraid that the point I am making is quite obvious: there is no profession in the whole world where you don't get any rotten apples. It's the same with doctors, lawyers, architects etc.

It might happen in Accountancy more frequently than other professions for one additional reason:

Unlike other professions, in Accounting anybody can set up business in the UK and call themselves accountants without being qualified, in the sense that they are members of recognised accounting bodies. Unfortunately, the government hasn't restricted the use of the term "accountant" only to those qualified persons. That of course would have been a good step towards protection of the general public.

Instead, this has led to the public being easily misled into entrusting their finances and business affairs to somebody not properly qualified for this purpose. But, would anybody trust his health to an unqualified doctor?

With this, I am not claiming that all unqualified accountants are useless and that all qualified accountants are super efficient. But, the heart of the matter is that by going to a qualified accountant you have an additional assurance that if they show negligence or incompetence in the handling of your affairs, they have in place adequate professional indemnity insurance against which the public can get compensation for any financial loss suffered.

In addition, the recognised accounting bodies force their members into receiving continuing professional education every year that ensures they are familiar and up to date with the changes in accountancy, tax and other rules and regulations relevant to their profession. And, legislation and regulations in this field are changing by the hour!

Another negative generalisation towards the accounting profession is that "The service accountants offer does not offer any benefits".

Accountants spend many years of their life studying and training to offer the public a professional service that is albeit technical. Accounting students are taught "generally accepted accounting principals, debits and credits, ratios and margins" only to find that once finished school they are unable to communicate their knowledge to the average business owner in a useful way.

The language they use is not easily understood by the average user of their services because the latter don't have the basic and fundamental academic or practical knowledge of accounting.

The same difficulty lies with other professionals like doctors, architects, lawyers etc.

Because accounting is a highly technical subject and as such not properly understood by the average business owner, people are unsurprisingly not able to compare between services offered by different accountants and evaluate and compare the benefits to them and to their business from a particular accounting service. That's why they come to conclude that all accountants are the same.

Don't get me wrong. This lack of knowledge has nothing to do with intelligence. I am not expected to understand the terminology a doctor uses in his profession unless of course he explains to me in layman language, like he would talk to a five-year-old child.

Partly responsible for this confusion and gap in communication are accountants themselves. Because traditionally they haven't made an effort to talk to their clients in an understandable language.

As a result, like people go to their doctor only when they have a health problem, business owners use their accountant only for compliance, mandatory reasons e.g. for their tax returns. In other words only and when they have to, in order to comply with the legislation. As a recent survey in the USA has shown, not a lot of business owner use their accountants to assist them grow their business. If you want to read an article on what benefits can be derived from an efficient accounting service please click here.

That popular misconception leads to more frustration, disappointment with accountants and lack of value from accounting service .

Let me explain what I mean:

People tend to believe all accounting services are the same because they don't understand accounting.  It is a common thing that we don't appreciate something that we don't understand. For that reason, people tend not to attach any value on the services from accounting service.

So, since they are all the same and that an accounting service does not offer any benefits, price becomes the major deciding criterion when choosing an accounting service.

What a fallacy and fatal mistake that can be!

By doing so (and thus going for the cheapest accounting service they can find), business owners shoot themselves on the foot! This is why:

The true cost of an accountant, whether an accountants is cheap or expensive is not judged only by the amount of fees he charges. As a matter of fact, sometimes it's the opposite. The true cost of an accountant should be judged by the amount of savings and earnings he makes for his clients.

If only entrepreneurs had realised what difference an accountant can make towards the achievement of the business goals to grow their business, increase their profits! They would have changed their attitude and view towards accountants!

It works both ways: a business owner chooses an accountant with price as the only criterion because he does not really understand the benefits that can be derived from an accounting service. The accountant does not want or cannot offer a value added/ customised service as the low price does not allow him to recover the rate he has set for offering his services! Can you see the knock on effect?

A qualified accountant is a professional person. He has spent many years of vigorous training and studying and goes through the pains of qualification. He works hard, long working hours, has a lot of pressure and undertakes significant business risk fighting with deadlines all the time. Missing deadlines means penalties and fines imposed on his clients that he will have to pay in the end.

As such, I am sure you agree that he deserves to be paid a good rate for his professionalism and hard work. Not an unreasonable and excessive one, but one that will compensate for his efforts and hard work as a professional and that will reward him for his valuable contribution in creating savings and earnings for his client. Does anybody question the fee of a doctor when the latter presents him with it?

As business owners are so price oriented for the reasons described above, he won't to be able to offer his client but the vary basic package of services if he is not to compromise his rate. These are compliance services only; preparation of business and personal accounts, payroll and vat to enable the person discharge his legal responsibilities. As a result, the client does not get any value and benefits out of the accounting service.

But, it's not only accountants who do that. When you go to an architect to order  a plan for a new house or for an extension you want to add to your house, he will give you one of the many plans in his archive (perhaps adjusting it slightly) if you are not prepared to pay the fee for a new plan that will meet your special needs and requirements while at the same time allowing him to earn a decent rate for his services.

It's the ancient question: What was created first, the egg or the hen? Or, to put it differently, it's demand and supply law at its worst .

As we saw, the price the client is prepared to pay, does not allow the accountant to offer any value added services. The accountant can't afford to provide a customised service that meets the client business needs and requirements. Can he be accused of looking after his own interests?

But, there is another reason (in addition to the lack of understanding of accounting) for value added accounting services not being commonly taken up by clients. That is down to human nature. It is therefore extremely difficult to deal with and overcome. Let me explain:

People are well aware that you cannot succeed in business unless you do two things, and they know that intuitively: sell more and buy for less. But, the way modern business is done, there is another law: the need to keep track. Please click here to read an article on the need to keep records.

As we have seen in another article , record keeping is necessary because of the way modern business is conducted in order to keep track of the progress of the business. It's only when track is kept that is possible to make decisions to correct problems or take advantage of opportunities.

By nature, people dislike dealing with finances. It's not something they take pleasure from (boring), dealing with figures and trying to make sense with information presented in jargon. Instinctively, the idea that dealing with finances might reveal to them problems and having to do something about it puts them off and make them push it at the back of their minds. So, they would rather not take it up.

The business owner's job is to make decisions to grow the business on the basis of financial information. The accountant can do a great job supplying that information, suggesting solutions to deal with problems or opportunities and advice where his wisdom is requested. Often the business owner is too closely involved to be objective and see where the strengths and weaknesses are. Therefore accountants are often a good source for independent assessment.

The role of an accountant is to be a financial doctor to diagnose where it hurts and how to fix it. They are perfectly positioned to act as financial advisors because of the theoretical background and after so many years of experience dealing with so many businesses. They can offer invaluable services to serious business owners that are interested in growing their businesses and increasing their profits..

People who want to protect their health, go to the doctor every year to have preventive medical check ups.

Preventive and detective action is preferable to having to correct things.

But, unless business owners co-operate with their accountant, nothing can be achieved. As they know that well, they'd rather pass.

In addition to financial planning, accountants help their clients maximise their tax savings while staying out of trouble with the taxman. They can also offer substantial help to minimise tax bills for them through tax planning and proactive advice.

As we have seen, accountants are used basically for compliance reasons. That means preparation of accounts for tax filing reasons in order to comply with legislation imposed by the Government.

Compliance is mandatory. People don't like being forced to do something. They hate it. It's human nature.

Enough of this. Let's move on to the next misconception.

Business owners don't like paying taxes. None of us does.

Accountants have the misfortune to be the "messenger", the middleman between them and the Government and the taxman. The bearer of bad news when there is. They are the people that say to the business owner what can be done and what cannot be done to save taxes. But they are also the people who have the unenviable task of reminding business owners about their duty when it's time for them to pay their taxes.

Have you heard the expression "shooting the messenger"? If you cannot take out your dislike to the person who is responsible for your misfortune, you "shoot" the person who happens to be in the middle. It's human nature.

This is the reason some people might even reach the point to believe that their accountants are on the side of the taxman.

But, the relationship between the client and his tax adviser doesn't have to be like this.

As a matter of fact, accountants as tax advisors know how the tax legislation works inside out, both in theory and in practice. And as such, they are well placed to advice business owners how to minimise their tax bills within legal means.

There are many legal ways to plan your tax affairs in such a way so as to pay no more than minimum taxes. Qualified accountants are restricted by their professional associations from assisting clients perpetrate tax evasion (illegal). Tax evasion is nowadays regarded as a money laundering activity in the eyes of the law in this and many other countries.

Let me tell you one thing: if an accountant does advice illegal ways to save taxes, he is only storing trouble for his client for the future as sooner or later the evasion will be discovered.

And not only that! A qualified accountant is actually helping his client stay out of trouble when he signs your business accounts that he submits to the Inland Revenue because his signature gives greater credibility and weight to those accounts.

Bearing in mind those negative general misconceptions, how do you ensure that you choose the RIGHT accountant for your business that will help you achieve your business objectives and save taxes?

To find out which accounting service would be best for your business, please click here to read the related article.

Please feel free to use all the information that you will find on the web site.

If you have questions, please feel free to contact me personally at any time. You can call, e-mail, fax or write to me and I will be happy to answer any and all of your questions.

Good luck in your business ventures!

Demetris Savva BA FCCA
Constantine Savva Accountants Ltd
Chartered Certified Accountants
155A West Green Road
London N15 5EA
Telephone: 020 88094468
Fax: 0845 0500905

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