State of the Union: The Irrelevance of Good Accounting?
I’m a little concerned, and any professional in accounting and finance who works with small businesses should be just a little concerned, too. Why? Because there is a belief out there that some nifty software and Internet Of Things (IoT) approach to finance will ultimately eliminate the need for a small business to work with skilled, trained accounting professionals. Remember the marketing slogan introduced by Intuit with QuickBooks – the one that suggested that, “if you can write a check, you can do your own books”? Most accountants will tell you that it is not true, and the ability to operate a product like QuickBooks does not magically turn poor accounting and bookkeeping information into good business data. In fact, it most frequently enables bad information to turn into bad business decisions – quickly.
DIY bookkeeping solutions have been around for a while, so why the distress about it now? Up until this point, it hadn’t been so overtly stated to small business owners that having less-than-great accounting data is very much OK, and that the role accounting professionals play in small business finances is more of a burden than benefit. Consider the statement made by President Obama in his recent State of the Union address:
“Let’s simplify the system and let a small business owner file based on her actual bank statement, instead of the number of accountants she can afford”
If I’m an accounting professional, I am pretty steamed up about that statement because I know how screwy business accounting data gets when the work is done by folks without the proper training. Incorrect or improper accounting treatment can make a big difference when it comes to filing those taxes mentioned…. and not in a good way. That transaction on the bank statement… Is it a cost of goods sold or a regular business expense? Is it an asset or supply item? Is it a reimbursement or revenue? Is the payroll deduction before or after taxes? Is that even a viable payroll deduction item? These questions and more arise frequently in a small business, and the treatment for these items is improper as often as not.
There is a big value in what a trained accounting professional can offer a small business owner, and the value often translates to eliminating unnecessary tax burdens and the delivery of accurate reporting – both of which are really important when it comes to actually trying to grow a healthy and sustainable business.
Small businesses are often considered to be the fuel powering our economy. Doesn’t it make sense for us all to recognize that smarter businesses are likely to be more successful, and that more successful small businesses means growth in the economy? The importance of good fiscal and financial management and reporting – in business and in government – is not something to minimize, and suggesting that it takes no intervention or skill to do the job properly reflects poorly not only on the person saying it, but on the entire establishment.