I am an accountant (both managerial accountant and auditor) and have been working in the field for such a long time as well as teaching accounting and other subjects in accounting; I am also an economist, the combination of accounting, auditing and economics had given me a fanastic since of analaysing what is going on around me. I remember that we are hooked on making the books balance, check that no bill goes to the wrong account, balance the budget, forbid over spending, doing forecast on the basis of past experiences (at times we take into account new projects and extrapolate the budgets).
However, when it was time to start a business, I hired an accountant as well as auditors to do the books. The accountant and the auditors continued to do what the team and I in those places, I had worked for, did; basically, looking at balances and making sure that no over spending is done. The audit report comes out 4-6 months after the year ends and everyone goes by the accounting concept “Going Concern” which means that the company continues to practice its affairs and will be living in perpetuity. However, my thoughts tell me that what us the accountants do is not a good thing. Bear with me on this point.
We did a search on the companies that perished due to accounting mal-practices. Of course, very few sites will talk about the SME’s, rather a focus is made on large corporations. The accountants have inflated the assets, the accountants didn’t realize that the business is not doing well, the accountants didn’t communicate to management what they saw (if they saw it) are some of the reasons for the failure. I am listing down few sites that talks about the scandals.
On the other hand, we had the big five accounting firms until 2001 and since Enron, we have the big four, that almost every huge corporation uses. The audit report has a cliché “the accounts represent a fair value of the company” I know that we only take last years’ results and add the current year results, then we discuss it and sign the report. There is no digging and no accountability.
I am not going to talk about large corporations in this last comment as we need to focus on small companies who are the main wealth generators in any country; small business pay a large fee for their books to be looked at by accountants and auditors. What do they expect to receive in return? Well, basically we need to know that the company is doing well? If sales are picking up, if we have bad debts, if we are invoicing for all the products and services that were rendered, that we can be a “Going Concern”?
Is this a possibility? Are the accountants knowledgeable? Are they fluent? Can they communicate and provide sound opinions on past and extrapolate the future to protect the company?
Let’s go back to the reasons I am writing this article? I have checked some good universities around the world, basically, New Zealand, UK, USA, Australia, compared the list of courses an accountant needs to do, then tried to remember the courses that I had done while doing my specializations. Well, few subjects are strikingly needed but not evident anywhere. Mainly Communication skills, research skills, forecasting skills and last but not least psychology 101.
I feel that communication skills is an important subject to be added, the accountant has to be able to speak and express his/her opinions about the books. The information of the past needs to be analyzed and conveyed during the month and the year and not six months later when the business is almost falling. The accountant needs to have mathematical skills to provide some charts and forecasts to the client, also some basic research abilities to dig into the books to see what did we spend on and how the products are priced, he or she also need to be tactful, so knowledge in psychology should be given.
Maybe we should discuss this matter with small universities that are open to community discussions or make these subjects as pre-requisites to studying accounting. I feel that care about the economy is the main reason why accountants need to be ethical, and ethics means that we must ensure the company continues to be a “going concern”