Karen Fischer

Why Is My Accountant Not Giving Me Business Advice ?

February 10, 2015

As we start work with a client, there are many times that the owner will say, “My accountant does not provide me advice on my business, they only compile my statements and do my taxes”.  What most business owners do not understand is that in most cases, they are only paying their accountant to perform those two tasks when they visit them once a year. In order to provide you advice on your business, the accountant would need to come in and learn more about your business in a lot more depth than your accountant does for what they are doing now. To fully understand this, it is imperative to understand the difference between financial accounting and management accounting, along with what functions you are asking your accountant to perform.

Financial Accounting
Financial accounting is for presenting the financial position of your business to its external stakeholders in order to understand the health of your business.  External stakeholders can include your Board of Directors, other stockholders, investors or lenders. Your financial statements represent the results of your business over a specified time period and are used to compare present results to your past results to see if how your business is performing. Financial statements reporting is based upon what has happened, so they are ‘backwards’ looking.

As a private corporation, your financial accountant creates financial statement compilations (Notice to Reader). Your compiled financial statements are then used as the basis of calculating your business income tax.  Your accountant may make recommendations based on the information you provide them, but they are not going digging into your financials to uncover any issues or misclassification's or any wrong doings – that would be done through an audit or review and is not what you are paying for when you ask them to compile your statements. The reports they provide with the compiled statements do not provide an opinion or give any assurances that the statements are in accordance with Generally Accepted Accounting Principles (GAAP). In some cases, an investor or lender may require you to have an audit or review which will require the financial accountant to go through your financials in detail to provide some level of assurance that the statements are free from material mistakes and fairly represent the operations of the company.

It is very important that when you review financial statements that you look at the beginning of the report to see one of 4 things:
  1. Notice to Reader – done with compilations, or
  2. Review Engagement Report – no audit opinion rather a statement of belief that statements are in accordance with GAAP, or
  3. Audit Report - provide the user with the auditor’s opinion regarding the statements presentation is compliant with GAAP, and
  4. Compilations are signed by a professional accountant such as a CPA, CA; CPA, CMA or CPA, CGA and that the review or audited statement are signed off by a Licensed Public Accountant usually a CPA, CA; CPA, CMA or CPA, CGA.
Management Accounting
Management accounting is used by business owners and other management to make decisions concerning the day to day operations in your business. Management accounting is based on current and future trends and does not require exact numbers to be used.  Because you often have to make decisions in a short time period through a fluctuating environment, management accountants rely heavily on forecasting of markets and trends when working with you. Management Accounting combines accounting, finance, and management with professional insights and methods.

Unlike financial accounting where financial statements reporting is based upon what has happened; management accounting makes use of these statements combined along with analytical tools and techniques and will focus primarily using ‘forward’ looking analysis and reporting suited to managements needs.

Financial Accountants and Management Accountants
It is important to understand your requirements and your expectations when you hire or engage an accountant, as well as understand what functions they are able to perform for your business.  Not all and in fact most do not perform all functions.  In some cases you might have a financial accountant to compile your statements and help you file your business taxes.  You might then need to engage a management accountant to come in and help you with functions such a performing feasibility studies or helping you with functions such a budgeting, pricing, costing, productivity analysis, or profit analysis. In many cases you will have accountants that will perform some functions of each based on their background and clientele.  If you have an accountant that performs all of the functions you require, it is essential that you engage them for all the purposes you require. As with any professional you hire, they are not going to just provide you with advice on a particular issue with your business when that is not what you have hired them to do.

Market Research Prior to Starting a Business Can Save Your Money and Frustration

January 21, 2015

Too many people have what they believe is a great business idea and then go off and start a business without having performed the upfront research to understand if there is a market for their product or service.  Once one determines whether there is a market, there needs to be due diligence performed to understand if the idea is something that is in demand or whether this is a product/service that will require a lot of marketing to sell.  One needs to know their competition in the market in w...

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How Tired Are You Of the LinkedIn Roller Coaster Changes Ride ?

December 8, 2014

If you are an avid user of LinkedIn and utilize many of the functions, do you find yourself being frustrated by the constant changes that they implement? Do you then spend way too much time trying to figure out what is going on and what changes affect your profile or your business page now?

If you do you are not alone. On the one hand I truly love LinkedIn; as it is truly the best platform when it comes to a true B2B social networking. The but is- as someone who pays for the Premium service, I...
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A True Entrepreneur - A Smart Way to Start a Business

November 2, 2014

We very rarely work with start-up businesses as 9 times out of 10 they are usually calling to get “free advice” and are not really serious about taking the risk and investing the time and cash needed in their business. Then there is that 1 out of 10 that exudes the term – A True Entrepreneur. That term does not even begin to describe Janet Sirko, of Ashbro Inc., who is on track to be a true Canadian entrepreneur success story. In addition to this story being about Janet, it is about bui...

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5 Tips For Getting The Most Out of Your Business Social Media

September 18, 2014

I have a client who works with a group of small businesses as their client. While working with them on their own social media, I uncovered that most of their clients will not realize the benefit of social media in their business.This is primarily due to how the sites are set up and how they are actually using them today.This is not an uncommon phenomena, as many businesses  know they need to use social media, but have never been taught what needs to be done, or  have just not had the time to ...
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Business Productivity Measures Made Simple

July 29, 2014

Ever wonder how productive your organization is?

We have consulted with many businesses and found that on the average, businesses are less than 50% productive. This usually comes as a surprise to the business owner. After the surprise is digested, the usual follow up question is: How did you come up with that number. Here’s how I did it.

  1. Determine how billing for revenues works. If it’s by the hour or quoted by the job, ask, how is the price worked out for the work being provided and how ma...

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LinkedIn - The Value of Their Post Blog Feature

July 26, 2014

Blown away is putting it mildly of how I felt this morning after posting my first post on the New LinkedIn Feature Blog Post feature. I  had noticed this feature was available a few months back as I watched my peers  and connections using it. I soon  began wondering why  as a  paying customer with a Premium Account why those that are paying nothing are receiving valuable features before those of us that pay. I was especially tickled at the young woman on their support desk's reply that as a P...
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Nurturing the Sale Funnel Using Social Media

July 22, 2014
About the Guest Contributor

Russel Cooke is a Customer Relationship Management (CRM) expert and journalist living in Louisville, KY. His work often explores globalization, business relations, software development, and social media. In his free time, he enjoys hiking, spending his time with girlfriend, and fretting about hockey.

Since its invention, social media has slowly but surely infiltrated the lives of all its users. For a medium meant to connect people together over a site-specific interf...

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Finding The Hidden Costs of Choosing a Manufacturer Outside of Canada

July 6, 2014

I spent time with a client this week and a local manufacturer that is producing their new product.  The reason for the meeting was to understand all of the costs to help the client figure out how to price the product to market.  As we sat there talking about different scenarios with the manufacturer, I started asking myself why we have become brainwashed to automatically think about shipping our work overseas for a better price. This is definitely true if we watch the Dragon’s Den because t...

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Have You Truly Invested In Your Business from the Start

June 12, 2014

When many small business owners start their business, one of the first things that they usually do is look for financing for their business.  When one applies loan, the lender will want to understand a breakdown of how you will use the money.  In most cases the owner is thinking about the capital equipment they need, a mortgage or lease, as well as the inventory for the first month of their business.  In many cases, they completely forget about including funding to cover marketing and genera...

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About Our Canadian Small Business Blog

Our Canada small business blog provides you with articles and small business advice across different areas of your business and in support of our small business consulting and small business coaching practice. Our business focus is on providing small business content and advice to small businesses in the Canadian market. Our only focus is on Canadian small businesses or businesses outside of Canada who want to do business and provide new jobs to Canadians, but welcome visitors from outside of Canada in hopes that the advice we provide can help them as well. Visit us often, or subscribe to our small business blog Canada, as we will continue providing small business advice, small business tips , and techniques on topics of interest for your small Canadian business, whether you are a start-up or a mature small business. We would also be interested in hearing from you on small business topics of interest, or hearing questions that you might have in areas of your business.


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