Choosing and Dealing With an Accountant
Accountants generally charge for their services on an hourly basis. They purchase time from their staff or themselves and sell it to clients. Unfortunately the hourly rate is not important –the value you get for your services is important. Also remember accountants are not mind readers –ask and tell them.
How do you determine value? Firstly understand the two types of services you receive. First one is “compilation”. Which simply means –providing regular preparation and filing services such as tax returns, corporate financials statements, GST, payroll etc. The second one is “value added”. This is where you ask questions for planning purposes prior to closing a deal. Question such as –how shall I finance this property? Or I am planning to do it this way –is it okay? This is where you get an input on your set up that can save you a lot of money. This is where they have actually walked on the same path –they have made the mistakes and learned from it –they are better suited to understand your needs.
For your compilation work, which accountant do you think will be more efficient? one that is organized and does it the same way each time or one that does not have systems in place? Have you tried going shopping without a list? Have you forgotten to purchase some items? If you had an accountant that had systems in place and prepares the return with you on his mind, do you think he would do a better job than the opposite? The difficulty with clients preparing information is they have no systems in place to check what is forgotten. If the accountant is in the same boat, now tax preparation becomes a chance to a memory game to get the tax return done right.
Secondly, put yourself in the accountant shoes, remember their work is deadline oriented. Do you think they can train and maintain enough people just to handle peak period work? Not likely. Which client will get better service- a client that is organized, brings the records early or one that brings it in last minute, had to get numerous reminders and the information comes in dribs and drabs?
I have gone back and reviewed timesheets on clients with similar needs and yet there is big discrepancy in the fees. There were two reasons for the discrepancy – one was the information was very difficult to gather, it came in slowly over time and clients keep answering the wrong question. At the back office, a staff picks up the job, familiarized with the trying to remember where they left off and repeat this process till the return is done. Unfortunately, you get charged for the time it takes to do the return. The accountant is not in a habit of paying staff and not charging you to the work. Remember when you get a letter from your lawyer or accountant, it is important –it is not a love letter! Secondly, rush jobs. The old saying haste makes waste is true. When staff rush through jobs at the end, we have to tighten our systems to check the work and we find more errors which again take time to fix. After all we are humans doing accounting work!
At our office, our tax season starts in the summer prior. We go back review the problems we had, fix our templates and start creating our templates for next year for each client. This ensures that we have systems in place to get the job done quickly, catch errors easily and move forward. Once tax season hits, we have small systems in place such as
- Having one box per client so that we do not waste time looking for documents
- Having only one file on each desk so that we do not mix different clients files
- Having a system to prioritize a job so that the staff do know what is required of them as opposed to wondering what I shall do next
- Start one file and work on it till you finish that file so that the staff do not have to comeback to it to familiarize themselves again.
- Standard documentation procedures so that we know how the information was obtained.
- Paperless files –so that we do not waste time filing and retrieving paper.
- All our staff have dual screens on their computers to reduce errors
Now to get real value from your accountant, it comes from questions that you ask. As accountants, we have no idea what our clients do or think. Some clients think they get value from a face to face consultation with their accountant. Nothing can be further from the truth. Firstly, you may forget to ask all your question. Secondly, after your questions have been answered, new question pop up. Next, your timing may be wrong. If the accountant is trying to meet deadlines, his mindset will be with the deadlines, not your problems. Unfortunately, it is a human thing. We are focused on our most pressing problems. The accountant is a human being as well. So how do you get real value? Firstly, when you think of a question – send an e-mail. Generally e-mails are dealt with when the person has time and will be able to focus on your issue. This is generally not true with people who use crackberry’s. Secondly, we get asked a lot of hypothetical questions. These are nice chitchats over a beer –but lets not waste anybody’s time. The questions you ask generally should be to do with your immediate future direction that has a tax or investment component.
There are accountants that do not like answering these question because of fear from lawsuits. Some clients fail to understand that an accountant is not an expert at predicting the future. Accountants cannot bless a deal. They simply are a sounding board for you to make a better decision. I have clients that will make a statement like “you know the (name of town) is going up right?” Reality is I have no idea and that is why I attend real estate courses to get a better understanding of the market place. I will get clients that will ask –I have purchased a house on abc street in the city of ……- for $........ –what do you think? So when an accountant says –I do not know. That would be correct –but there is nothing wrong with a discussion from a tax perspective of how financing should be set up, if the timing of selling or buying may be correct, if there are other factors you should be considering or I may say –hey this is a legal issue –contact a lawyer.
Having said that you should e-mail questions, spam filters today are an issue. If you do not receive an answer in a couple of day, it is best to call and find out if the e-mail got through. Also when you are asking question, and if your closing is tomorrow, there is no point as you cannot change the set up. It also frustrates accountants as you are passing your urgency because you ignored it earlier on.
You must also understand your accountant’s bias. For example, I am more real estate oriented. My focus is on long term cash flow properties. Hence, I will be more positive on these types of real estate. I will be more negative on flippers of real estate, mutual funds, foreign exchange traders and day traders. I look for more solid long term returns as opposed to a higher risk returns. I come across builders and land developers that do well. I have not done these kinds of transactions. So if I get a question that is not a tax question, I would try and put a client in touch with another client in a similar field so they can help each other. Other accountants may consider all real estate risk and mutual funds of less risk. Overall, most accountants have similar training in dealing with the compilation side of our practices, but our take and experience of life and investments are different. Our organizational skills are different. So you need to find someone that fits with your long term needs. There may be variations from what you think and the accountant thinks, but the final decision has to be yours as you should only use your accountant as a sounding board to help you reach your goals.
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Navaz Murji CGA
Murji & Associates
Ph 604 415 0808
Fax 604 415 0802
www.realaccountant.com