Not all accountants are created equal. Before hiring one, better make sure he is qualified.

What to look for in an accountant
By Peter Diekmeyer o Bankrate.com

With the increasing size and complexity of Canada's tax code and accounting standards' manuals, it's almost impossible for ordinary Canadians to stay abreast of the rules that underpin their financial lives.

While almost half of all Canadians still manage to fill out their tax returns each year, there's no guarantee that they are doing so in a way that minimizes the tax they pay. As a result, more and more of us are using accountants to help out. The growing numbers of self-employed Canadians are also increasingly seeking accounting services.

But finding a good accountant is easier said than done. A good one can cost fortune, -- ranging from $30 up to $400 an hour, -- and there are so many designations out there, (CA, CGA, CMA and so on), it's hard to figure out who specializes in which branch. Worse, because of the complex work that accountants do, it's hard for a non-professional to evaluate their performance. That means choosing the right person is crucial.

The designation game: CA, CMA and CGA
Articles like this one typically advise readers to hire an accountant who has a professional certification from one of the country's three main professional accounting bodies. However although few people have gotten fired for hiring an accountant with the right letters on his business card, designations don't tell the whole story.

The country's three professional accounting bodies, --the Canadian Institute of Chartered Accountants, the Certified Management Accountants Canada and the Certified General Accountants - are in a never-ending turf war, often trying to be all things to all people.

On the positive side of the ledger, to be a member of any one of the three professional bodies, you have to have completed at least a university degree, including numerous accounting courses and have completed rigorous professional exams. Tax training is also typically included. But each organization tends to interpret the capabilities and competencies of its members broadly. The qualifications that you seek will depend on what you want your accountant to accomplish.

Chartered Accountants
As a group, chartered accountants are arguably the best trained of all the accounting professionals. Although almost any accountant or bookkeeper can prepare a set of financial statements for an individual or small business, CAs are the only accountants who are allowed to audit and sign those statements, certifying that they have been prepared in accordance with Generally Accepted Accounting Principals (GAAP). CAs also develop the nation's generally accepted accounting and auditing standards.

That said, although all of Canada's CAs have completed an apprenticeship in public practice, only about 40 percent of them work with the public. The balance work either in industry, government or education. Because of their training, CAs will --as a rule-- be the most expensive of all accountants. If you are thinking about hiring a CA, you should make sure that he has a lot of recent experience dealing with the public, especially with smaller accounts.

Certified Management Accountants
Canada's 37,000 certified management accountants generally work within large organizations such as businesses, governments and not-for-profit groups. They monitor, interpret and communicate operating results, evaluate performance, control operations, and make decisions about the strategic direction of the organization.

While CMAs don't generally work in private practice, most of them should have the basic training to be able to help a self-employed person or small business owner handle their books, prepare their returns and complete regulatory filings. As with CAs, don't hire a CMA for their designation alone. Make sure they have experience in dealing with people like you. Try and get at least three references.

Certified General Accountants
Certified general accountants are a bit of a mixed bag, with many working in business, education and government. That said, a significant portion of Canada's CGAs work with the public, mostly with individuals, the self-employed and SME owners.

Hire someone that you have a rapport with
For most Canadians, an accountant's reputation and the rapport that you have with him are far more important to establishing a beneficial relationship than a professional designation.

Even the best-trained accountant cannot perform well if he considers you too small a customer to be worth his while, so look for someone who deals with individuals, not big businesses. A good flow of information between accountant and client is crucial to ensuring that the relationship works. Look for an accountant who will take the time to listen to and answer your questions, rather than the guy who grabs your shoebox full of receipts, and rushes you out of his office.

Advice: Ask your friends, get referrals
If your personal, tax and business affairs are not overly complicated, your best bet when finding an accountant is to ask your friends who they are dealing with. Your friends will likely have many of the same needs as you, and a good reference gets you halfway there. That said, talk to at least three accountants before choosing one. The mere act of "shopping," for an accountant will give you the opportunity to get lots of free advice, because accountants -- like most businessman, -- will never have as much time for you as when they are trying to sign you up as a client.

Conclusion: Take a bookkeeping course
But probably the best advice that almost any Canadian can take is to try - as much as possible - to be your own accountant. Learn the bookkeeping, budgeting and record keeping basics. Read at least enough about taxation to able to ask your accountant the right questions and to do a quick verification of your tax returns to make sure he made all of the basic deductions.

Research and anecdotal evidence shows that people who understand finance and manage money well, -- even if they don't have a lot of it, -- are happier than those who don't. So go out and hire an accountant to perform tasks that you can't. But also take a little time to learn how to manage your own financial affairs. It'll be the best time investment you'll ever make.

 

Web-sites:
Canadian Institute of Chartered Accountants: (http://www.cica.ca/index.cfm/ci_id/17150/la_id/1.htm)
Certified Management Accountants Canada:
(http://www.cma-canada.org/index.cfm/ci_id/45/la_id/1.htm)
Certified General Accountants (Ontario)
(http://www.cga-ontario.org/)

 

 

Peter Diekmeyer (http://www.peterdiekmeyer.com/) is a Montreal based business writer.

 

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