The other day I attended a professional development course put on by the CPA Association of BC (Chartered Professional Accountants). The course concerned changes in Accounting Standards for private enterprises, non-profits and public companies. According to the handout there are approximately 1.2 million private businesses in Canada. This compares with 3,600 public companies and 160,000 non-profits.
Of the 1.2 million private businesses, at least 90% have 10 or fewer employees. In British Columbia on Canada’s west coast – where my practice is located – about 4 in 5 small businesses have fewer than five employees.
So you can see that the number of very small – and typically unsophisticated – businesses is very large.
There are more than 200,000 CPAs in Canada. The majority of these work in government and/or in industry and – the last I heard – only about 25% work in public practice. Which means that there are only about 50,000 CPAs that provide accounting and tax services to the 1.2 million Canadian private enterprises. In fact many of these CPAs in public practice perform tax and/or audit services to the 3,600 public companies, which have much more onerous tax and regulatory compliance needs than small businesses do.
In other words, there are not enough CPAs to perform all of the tax and accounting services required by private businesses. As a result small businesses require additional assistance to cope with their tax and regulatory compliance needs.
There are currently no acknowledged standard-setting organizations for bookkeepers – that have the same credibility as CPAs. However there is a push among bookkeeping practitioners in both the US and Canada, to professionalize the bookkeeping industry.
How to Ensure That Your Bookkeeper is Suitability Skilled
There are at least 2 professional bookkeeping associations in both Canada and the US. They are doing their best to improve education and training in the industry. However most bookkeepers that provide services to startups and small business are self-employed and not subject to practice reviews. CPAs usually file tax returns and prepare financial statements. In the course of doing that work CPAs are in an excellent position to assess the quality of the information provided by your bookkeeper.
Using a good bookkeeper will make your accountant’s job much easier – and result in a more profitable engagement for the accountant. Keeping the quality of bookkeeping services up will also result in more accurate financial information throughout the year for their small business clients. I would hope that CPAs and professional bookkeepers begin to work together more closely to improve the quality of financial information available to small business.
It is clear that professional bookkeepers can handle routine payroll and consumption tax filings (eg. GST). However companies should be concerned if the bookkeeper attempts to file corporate tax returns or prepare financial statements. This is especially true if the financial statements contain a communication from the bookkeeping firm – particularly something like this:
NOTICE TO READER
On the basis of information provided by management, I have compiled the balance sheet of CORPORATION. as at YEAR END and the statement of LOSS AND DEFICIT for the PERIOD then ended.
I have not performed an audit or a review engagement in respect of these financial statements and, accordingly, I express no assurance thereon.
Readers are cautioned that these statements may not be appropriate for their purposes.
Vancouver, BC Date