Under the Companies Act, all companies in Singapore have to present financial statements that give a true and fair view of the financial position and performance and also one that comply with Financial Reporting Standard (“FRS”) at each Annual General Meeting (“AGM”). Therefore, some accounting work will need to be done on periodic basis; either you do it inhouse (eg hire an accounting staff) or outsource (eg to an accounting firm). You as the director of the company (or collectively all the directors in the Board), will be the one squarely responsible for ensuring this compliance. You are also responsible to maintain a system of internal accounting controls and keep proper accounting and other records that will enable the preparation of true and fair financial statements. A perennial question would be what are the things that I look out for ?
Consider what are your needs in 3 aspects: complexity, service nature and scope.
The complexity of your business will determine your consideration for the right accounting partner. The nature of financial transactions of an electronic manufacturer will be different from an electronic retailer, with the former having more complex transactions relating to joint or manufacturing costing as well as accounting treatment on work in progress, product obsolescence and wastages. A company in construction or property development would need to have its revenue assessed under FRS115 at a point in time against its performance obligations.
Is the nature of the services arising from a standard routine reporting of accounting or is it from a specific need of compliance eg IRAS tax investigation, GST registration due to revenue exceeding S$1m or from internal focus on financial insight on business pivoting.
A non business-as-usual (BAU) event or a one-off unusual factor that triggers the need for an accounting outsource would require a further consideration on the competence of the accountant to deal with not just accounting issues but also other related taxation, governance and business implications.
Some companies outsource its accounting, taxation, payroll and secretarial functions separately to different accountants while others prefer to deal with just one accounting partner. For some SME bosses, the accountant may be the first port of call that they seek counsel on business restructuring, talent management, revenue sustainability and IP management. The wider and more varied the span of the scope, the more important the element of trust in the supplier chain relationship. You need to feel comfortable that your accountant is able to be trusted, is dependable and contributes positively to your business.
The more complex is the need, the more affinity will be needed in an ideal accountant. You will need to feel connected to the accountant in terms of how the person would add relevancy or contribute positively to your business. This is not just a function of technical competency. The person who have to be able to communicate effectively, understand your business and able to think out-of-the-box to get you ahead in this disruptive and challenging business environment.
This is perhaps the most important consideration in the search for an accountant. More often than not, it is the only over-arching prerequisite. Understandably, as most SME are running on tight budget and challenging bottom line. But quality is never an accident and it is always the result of intelligent effort, in matching what you need to what you are willing to pay and able to get. You do not need to pay an insane price for quality but you have to be realistic about the quality that you will receive with a certain budget. There is a much larger picture than just setting a low budget and cutting costs. You will need to consider the range of alternatives and evaluate the best match.
You are still none the wiser after this 2 minutes read and you are not alone. Selecting the right accountant is not just a simple exercise of choosing the best at the same price point. It is not any easier than developing your bench strength and getting the right key talent to your team. It is a perspective of glass half empty or glass full or is this a cost or revenue driver, ultimately it is how you would want to run this.