Whether your business is just starting out or has been around for twenty years, one of the most important members of your external advisory team is your accountant, along with your business lawyer and financial planner. A good accountant can help you to avoid pitfalls along the road and can help you to make better decisions along the way. Choosing an accountant can be a daunting task. How do you know that your potential new accountant is qualified and experienced? What if you can’t understand what they’re saying as they converse with you in techno-speak? What happens if they steer you down the wrong path?
Choosing the right accountant can improve your bottom line immensely and therefore it’s critical to spend the time upfront understanding the process. Let’s first take a look at the term “accountant”. It’s a very generic term and, in fact, anyone can call themselves an accountant. It’s not a restricted title like “lawyer”, for example. You know that if someone has the word lawyer on their sign that they have a certain set of credentials and have been licensed to practice. Not so with accountants. The term itself does not denote any particular set of skills or experience. Within the world of accountants, however, there are professional designations. There are three accounting designations in
Canada
and each of these encompasses a different set of professional and experiential requirements. Although there are competent non-designated accountants, it can be difficult to assess their abilities, whereas if you hire a designated accountant, you can be assured that they have completed certain professional requirements in order to carry the designation. How can you tell if your accountant is designated or not? Generally, anyone who has met all of the requirements for the program and is legally allowed to use the initials after his or her name will do so.
The three accounting designations currently in
Canada
are Chartered Accountant (CA), Certified Management Accountant (CMA) and Certified General Accountant (CGA). In 2006, there were talks between the CA and CMA organizations regarding a potential merger, but that has been set on the back burner as the two groups work out their differences. Historically, the generalized focus of these designations was that CA’s typically worked in public practice with business and tax clients, CMA’s worked within large companies as controllers and treasurers, and CGA’s worked inside companies in internal accounting roles. Now, of course, you will find all three designations working in all of these functions.
Candidates in all three designations have to have an undergraduate bachelor’s degree to enter the program (a new requirement for the CGA’s), and then take a series of university level courses in accounting, auditing, and taxation. All three designations require an experience component, where the candidate must work in an accounting environment for a pre-determined period of time. CA’s must work in a public accounting environment and CMA’s and CGA’s must work in a corporate environment. You can review the requirements of the accounting programs on the websites of each of the professional organizations. Accountants with all three designations must also adhere to their organization’s set of ethics, which outlines proper procedures in handling client information as well as containing rules about independence and conduct. Client complaints about the ethics of their designated accountant can be brought to the attention of the ethics and conduct committees and if a violation is found, the accountant will face consequences, perhaps even a rescission of his or her professional designation.
How can you decide which type of accountant is best for your business? Should you hire your second cousin who works in an insurance company and has a few clients on the side? This is not the time to try to save a few bucks. Hire the right professional for the job. A good source of referrals is from the professionals you already trust. Talk to your lawyer about who they’ve dealt with successfully in the past. Also, network with fellow business owners to get their input. Once you have a short list of prospective accountants, make appointments with several. Most accountants will offer a free initial consultation, and this is a great time for you to ask them about their practice and their other clients. Don’t feel bad about “shopping around” for an accountant. Meet with several until you find the one that best matches your needs. Once you understand the basic training that your accountant has completed, it is important to assess how much experience they have had after completing their designation with companies like yours. For example, if you have a small computer repair company that you run out of your house, it wouldn’t make sense to hire an accountant that has mostly large off-shore corporations as clients. Conversely, if you have complex tax issues, you wouldn’t want to hire an accountant that deals mostly with bookkeeping and financial statement preparation.
Just as important as your accountant’s experience are their inter-personal and communication skills. You may be tempted to think that these “soft” skills are irrelevant as long as the technical skills are there, but if your accountant can’t speak with you in clear, simple terms, you won’t be able to benefit from their technical skills. Like your lawyer and doctor, it is important that you have a comfortable rapport with your accountant and feel that you can pick up the phone and discuss any concerns or questions you may have without feeling intimidated. Another reason why communication skills are important is that your accountant may someday be representing your or your company to the tax authorities. You need to make sure that they have the skills to concisely summarize and present complex financial information.
Having the right accountant on your team can dramatically improve your business so take the time upfront to pick the right one.
