The accountant relationship is one of the longest a business has and one of the least reviewed. Businesses stay for a decade with someone who files compliance work competently and provides nothing else, largely because changing feels disruptive.
Work out what you actually need
Accounting services divide into distinct things, and firms are good at different combinations:
- Compliance — annual financial statements, tax returns, GST. Necessary, commoditised, and increasingly automated.
- Tax advice — structure, transactions, planning. Genuinely specialised.
- Management information — monthly reporting, cashflow forecasting, benchmarking.
- Business advisory — helping you make decisions rather than reporting on them.
- Transaction support — buying or selling a business, raising capital, due diligence.
- Sector specialisation — rural, construction, property, technology. This matters more than most owners realise.
A firm that does your compliance well may be entirely wrong for a sale process. Knowing which you need prevents both under-buying and paying advisory rates for data entry.
Questions worth asking a prospective accountant
- How many clients do you have in my industry, and at what size?
- Who will actually do my work — will I deal with you or with a junior?
- How do you charge, and what triggers additional fees?
- What will you tell me proactively, versus what do I have to ask for?
- When will my annual accounts be ready after balance date?
- What software do you work with?
- Which of my current arrangements would you look at first?
That last question is diagnostic. A good adviser will identify something within the first conversation.
Signals it is time to change
- Annual accounts arriving months late, by which time the information is useless for decisions.
- Surprises — tax bills you were not warned about, particularly provisional tax in a growth year.
- No proactive contact between annual meetings.
- Nobody has questioned your structure in years, despite the business changing.
- You cannot get an answer in a reasonable time.
- They do not know your industry and it shows.
- The relationship is with a firm rather than a person, and the person changes annually.
Get more from the accountant you have
Before changing, try asking. Many accountants provide only what is requested, and the annual meeting is more valuable if you arrive with questions:
- Which direction is our gross margin moving and why?
- What is our debtor days figure against our terms?
- Where did the cash go, if profit and bank movement differ?
- Is anything here that would concern a lender or a buyer?
- What should I be watching monthly?
- Is our structure still right?
Accountants generally welcome these. Most clients ask nothing.
Changing without disruption
The process is routine and professional bodies have established practice around it:
- Appoint the new accountant and confirm scope and fees in writing.
- The new firm sends an ethical clearance letter to the outgoing one, which is standard courtesy and practice.
- Records transfer. Your books and records are yours. Working papers prepared by the accountant generally remain theirs, but the information needed to continue must be provided.
- Update Inland Revenue so the new agent has access and correspondence redirects.
- Transfer software access, and confirm you hold the subscription rather than the accountant.
Timing: change shortly after year-end accounts are completed rather than mid-way through a compliance cycle. That gives a clean handover point.
Outstanding fees should be settled. A dispute over fees can complicate the transfer of information you need.
Own your own data
Check the accounting software subscription is in the business name, not the accountant’s. Businesses that discover their accountant holds the subscription and controls access have a genuine problem at exactly the wrong moment.
Fees
Fixed-fee arrangements covering defined work provide certainty and are increasingly common. Hourly billing for advisory work is normal.
Be wary of the cheapest quote for compliance if you need advice, and of paying advisory rates for bookkeeping that could be done in-house or by a bookkeeper at a fraction of the cost.
Chartered Accountants Australia and New Zealand publishes a member directory and complaints process, and business.govt.nz publishes guidance on choosing advisers.
General information only, not financial advice.
