On a related subject

I was approached today by someone who has concerns about the way their accountant has behaved recently. I won't go into details here but it certainly sounded as though my friend had grounds for complaint.

Now let me be clear - There are always two sides to a situation like the one that was described to me. There my be extenuating circumstances. What was said/done may have been misunderstood. I know all that - although the surrounding details and the specific allegations in this case are pretty damning even if only partly true.

My advice was to try to resolve matters directly with the accountant. If this is unsuccessful and my friend wants to take things further I indicated that a complaint could be made to the relevant professional body. We checked and the individual concerned is a member of the Institute of Chartered Accountants in England & Wales. In such cases complaints can be made to the Professional Conduct Directorate if the professional and ethical standards of an Institute member does not meet the reasonable expectations of the public. The Institute website contains good advice as to how complaints can be made including copies of relevant forms and advice as to how diffciulties can best be resolved.

Are you paying enough?

We all know the old adage: If you pay peanuts you'll get monkeys.

Now that may be extreme when it comes to acountants but there are plenty who 'dumb down' their services so as to get clients who don't want to pay very much. The accountant may, for example, be trying to build up his/her practice so that it can be sold to someone else. The sale price will be a multiple of fees - the more fees the better. Even if each new client isn't paying very much, if there are lots of such clients it all helps.

Other accountants will agree to do the work you want for a very low price and then get one of their staff to do the work for you. You might have thought the accountant seemed impressive but in the event you never see them again, only the staff member.

The philosopher John Ruskin had the following thoughts on prices and values at the start of the 20th century. They remain as true today as they were then when it comes to deciding how much to pay for something:

"It is unwise to pay too much, but it is unwise to pay too little.

When you pay too much, you loose a little money; that is all.

When you pay too little you sometimes lose everything. Because the thing you bought was incapable of doing the thing you bought it to do.

The common law of business balance prohibits paying a little and getting a lot. It cannot be done. If you deal with the lowest bidder, it is well to add something for the risk you run and if you do that, you will have enough to pay for something better."

Have you found your level?

If your accountant works alone this 'secret' will not be relevant. But if your accountant has partners and/or staff, read on.

Many accountants have staff who work for them. In bigger firms there may be 2 or more partners and a number of staff. Who does the work for you? The owner/partner or one of his/her staff? Who do you speak to when you call? Who do you meet?

If you rarely have much to do with the owner/partner do you feel comfortable that you're getting any value from them just being there and available if you need them? I assume you're confident that they would be there if you needed them?

The question though is what are you paying for? If you have nothing to do with the owner/partner you may be paying more in fees than you need to be. Why do I say that?

Well, if your affairs are simple and straightforward for example and you're dealt with by a manager all the time you might want to ask yourself a few questions:

• why are you paying fees that cover not only the work the manager does but also a profit margin for the firm that pays him his salary;
• would you be able to enagage someone directly for a fraction of the fee?
• would you feel comfortable using an accountant who has no back-up or support?
• are you comfortable that the manager is giving you the quality of service that the owner/partner promised originally?

I should also stress that many people are quite happy to pay higher fees by virtue of the additional security and comfort they get from knowing that there will always be someone there to help them even if, for example, 'their' accountant is off sick, on holiday or has an accident.

What matters most

I used to be an accountant, but I'm alright now

In fact I'm still a member of the Institute of Chartered Accountants in England & Wales - the ICAEW. That makes me a chartered accountant - and it was a pretty tough qualification to achieve in 1981 when I sat my final exams. 25 years later and I can still remember the pressure!

Your accountant might be a member of the same professional body - it's the biggest accountancy institute in Europe. Equally your accountant might be a member of the ACCA, CIMA, ICAS, ICAI or any one of a number of smaller professional bodies. He or she might even be a member of a recently formed grouping of advisers who do not have any 'real' professional qualifications.

I have explained in an earlier blog that anyone can call themselves an accountant and that there are good reasons for choosing to use a professionally qualified accountant.

There are material differences between the exam syllabuses for each of the different bodies. A CIMA qualified accountant has different skills and expereinces to a Chartered Accouuntant and an ACCA is different again.

What really matters though is not what your accountant studied, or the prestige of his/her professional body, or the robustness of their process for insisting on continuing profesional development, 'quality' procedures or even their complaints procedure.

What matters most is how good a fit there is between what you want and your accountant's experience and experitse. Sadly some accountants claim expertise beyond that which they really have. Others do not have the experience to do what you need - and they can get away with this because you may not really know what you need either.

In a future blog I will provide further guidance on this issue.