Adrian pearson is A VETERAN UK CHARTERED ACCOUNTANT AND the founder of ledgerscope - A SOFTWARE COMPANY MAking great tools for accountants in practice.

Accountants' second opinions

Last Friday Steve Fewster tweeted a link to his blog post where he asks whether he should get a second-opinion on his company's financial accounts, from another accountant (or two). You can see that my response was to ask what insight he thought another accountant might be able to provide and Steve then replied that he "didn't know what he didn't know", so could not answer - over to me.

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Last Friday Steve Fewster tweeted a link to his blog post where he asks whether he should get a second-opinion on his company's financial accounts, from another accountant (or two). You can see that my response was to ask what insight he thought another accountant might be able to provide and Steve then replied that he "didn't know what he didn't know", so could not answer - over to me.

Sometimes exchanges like this get you thinking in a slightly different way about things you have known for years. Although I knew, instinctively, that just looking at the year-end accounts numbers would reveal nothing of value Steve assumed differently.

As a small business owner-director he assumed that the time and expense involved in having full financial statements prepared by his accountant meant that the results of the process must have real value: in those final numbers there must be business management gold. And what struck me was that this was a perfectly valid assumption for him to make.

It was, however, an incorrect assumption because the only value an accountant can add to a cold review of the numbers in isolation is perhaps to assist the business owner in understanding how to read them. Once the client knows these basics, and how to calculate the gross profit margin and compare it with last year, there really is little insight that the accountant can provide.

It is time that the profession was very clear with clients about what they are paying for when they commission year-end accounts. They are paying for something that is needed for compliance purposes: they are paying to keep HMRC and (maybe) Companies House happy.

Small business owners need to know that detailed, up to date management accounts, produced at least monthly during the accounting year, are where the value lies: that's where the business management gold is hidden.

In asking the question about the value of getting a second opinion, Steve exposed the fact that, as far as year-end accounts are concerned, there is no value in the first opinion.

The budget, who cares?

Xero not pausing for breath