GHANAIAN ACCOUNTANTS, OUR SMES NEED YOU TO UP YOUR GAME
“It is important to get an insight into business in times like these to make the right decisions” – Abdul Kalmoni, CEO of PC Trucks.
PC Trucks use XERO, a cloud accounting software. Mr. Kalmoni came to us because he was not getting reliable information from his system and wanted his people trained.
We run a diagnosis and came up with more than a training issue. There were problems with the setup and the data in the system. We have done several such reviews this year. Each of the clients has an accountant, a person with an accounting background.
Each of the reviews reveals problems that we classify as:
- Accounting knowledge
- Software knowledge
We discuss these issues further in the article. We highlight the issues to show:
- Prospective accountants where they must improve their skills.
- Employers areas they must assess when recruiting accountants.
Xero and many of the small business accounting software are accounting tools. You need a good knowledge of accounting to use it meaningfully. The issues here are:
- Limited knowledge of accounting entries behind the features
- The accountants are not aware, do not understand or do not apply the appropriate accounting standard (SME’s or full IFRS)
- Lack of accounting policies & procedures
These are fundamental problems. A way to address this is to update your knowledge after getting the certificates. Continuous learning is a must in this era of rapid changes in accounting.
Our impression is that users do not know enough about the features and their purpose. Inadequate software knowledge is a serious issue. Why? It is because:
- You will mess up the books if you don’t know the purpose of the features and how to use them.
- We are in an era where IT (information technology) is taking over the manual activities involved in bookkeeping. To function in this era, you must have a good knowledge of IT and develop new skills.
Controls are arrangements to make sure that the data you capture reflects transactions that have occurred, are complete, accurate and allowed. Issues indicative of control problems are:
- A lack of understanding of transaction cycles and the typical controls that apply.
- Closing of books – these are a set of procedures to ensure that the accounts are complete and accurate. Many businesses do not have defined processes for closing their books. This is a major weakness.
- Inaccurate accounting information – this is the effect of all the factors noted above, and the lack of controls. One role of controls is to detect when something is out of order.
We noticed that accounting for VAT, levies and withholding taxes was inaccurate in many of the files reviewed. These taxes occur routinely in a business. Poor knowledge or inaccurate accounting treatment can cost the company in penalties and inaccurate information.
The solution is for the accountants to take annual update courses on these taxes from knowledgeable tax professionals, and tolearn how to process tax related transactions in the software. You must always reconcile the figures filed on returns and those in the software.
Quality of Accountants
Lack of excellent accounting information is an impediment to properly managing an SME in Ghana. Entrepreneurs can do something about many of the problems, but not the quality of the accounting pool from which they recruit.
I believe it is up to the schools, universities, and professional accounting bodies and the individual to resolve this problem. It is not enough to teach theory. We should care about the ability to put the ideas into practice. The processes for ensuring that accountants have adequate practical experience are not effective, and all involved must look for ways to address this weakness.
For more blogs and information please follow SCG Chartered Accountants on Facebook, Twitter, Youtube and LinkedIn.