Online Accounting Software Is Great – But It Won’t Make You An Accountant

KASHOO is Vancouver-based startup located on Railway Street, just outside of Gastown.

They began life as an accounting app for the iPAD – and I really wanted to like them.

However when I first tried to use the software a few years ago, I found I had to re-enter the entire year’s worth of transactions. There was no way to enter a trial balance as at a point I time, and then work from there.

A few days ago I received an email from KASHOO software (see inset). Clearly they are trying to position themselves as business advisors to small business.

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There is a fundamental problem with ALL accounting software.

Presumably they’ve improved their product since then – but I don’t have time to continuously review accounting software. There is a fundamental problem with ALL accounting software. The publishers are trying to sell as many licences as possible. They sell directly to small business owners, they sell to bookkeepers and they sell to accountants.

When selling directly to small business owners they trade on the fact that accountants are perceived as expensive. So their sales pitch focuses on the amount of time that it will save your accountant when doing the year end. Presumably the accountant will reduce his fee because he or she will do the year end more quickly.

As a professional accountant I have only rarely seen a set of financial statements that is even close to accurate when prepared by the business owner. In fact it usually ADDS time to my file as I typically need to reclassify, reallocate, reconcile and generally re-do many of the transactions. Starting with a set of accounting records that has been improperly put together is actually harder – and more time-consuming – than starting from scratch.

Starting with a set of accounting records that has been improperly put together is actually harder – and more time-consuming – than starting from scratch.

Ideally software vendors want accountants to recommend their accounting software. Failing that they want bookkeepers to recommend their product.

When selling to bookkeepers they recognize that the greatest problem most bookkeepers face is the lack of credibility. CPAs undergo rigorous training which is actually recognized. By contrast bookkeepers are trying to ‘professionalize’ bookkeeping. The Certified Professional Bookkeeper designation (“CPB”) is a valiant attempt to do this. However the CPB designation is not an accounting designation and isn’t widely recognized.

As a result software publishers offer a variety of certifications in specific software packages. So the bookkeeper adds CPB and Quickbooks Professional Advisor behind their name. Voila – instant credibility. Except it isn’t.

Generally financial statements prepared by CPBs are better than statements put together by small business owners. The problem is that too many bookkeepers don’t stop there. In a 2019 study by K2E Enterprises found that 73% of bookkeeping firms prepare corporate tax returns.

In the 1980s when mass market accounting software was first introduced, the role of the bookkeeper changed. I would argue that the bookkeeper effectively disappeared. Bookkeepers were using accounting software and performing the accounting function. The only difference between them and accountants was that they had little or no formal training – or supervision.

While I actually think that QUICKBOOKS ONLINE (and XERO) are great products, they are designed to be used by accountants. CPBs – if they stop at doing the accounting – can be an important part of the accounting team.

Unfortunately software companies like INTUIT are perpetrating a myth that being an accountant is ‘Quick and Simple’ if you use the right software. Since INTUIT also publishes (PROFILE) tax software, they are further pushing this nonsense into the world of tax – which CPBs are categorically NOT qualified to do.

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So who is Mike Widdis, ICA, CPB?

It is probably telling that INTUIT got it wrong. He isn’t an “ICA”, he is an “ICIA” Has anyone ever heard of the Industrial, Commercial and Institutional Accounts?

Published by Rob Farrow

accountant, entrepreneur, former chef, occasional artist, angel investor, business advisor, corporate tax specialist

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