Incompetent Accountant? Here’s What to Do About It

It’s a nightmare scenario – you hire an accountant to help with your books, and they don’t know what they’re doing.

What can you do if you find yourself in this situation?

Do you fire them on the spot? Do you report them? What if it’s in the middle of the tax season and your tax accountant is incompetent?

Join us as we explore this tricky situation for many business owners.

What makes an accountant incompetent?

Before we can answer that, we need to ask what you expected from them in the first place.

If you hired someone with no accounting experience, then it’s probably unfair to expect them to be able to do your taxes correctly.

On the other hand, if you hire a certified public accountant (CPA), you rightly have higher expectations. They should be able to prepare and file your taxes correctly.

Below are some of the reasons why an accountant may be considered incompetent:

• Inability to do the job

A certified public accountant must prepare financial reports, maintain records, and do other complex tasks like financial management and filing tax returns. If your accountant cannot complete these tasks, they are considered incompetent. Even when they do it halfway or mess it up, it still counts as incompetence and will fall under professional negligence.

• Inability to communicate

Your accountant should be able to explain your finances to you in layman’s terms. If they cannot do this,  it will be difficult for you to make decisions about your business.

If your numbers guy cannot explain financial reports satisfactorily or show a lack of transparency in their work, this is another communication breakdown that points to incompetence.

• Unprofessionalism

This one is pretty self-explanatory. If your accountant is not meeting deadlines, is constantly making mistakes, or is generally unorganized, they are not doing their job correctly.

• Professional negligence

Professional negligence is when your accountant makes a mistake that costs you money. For example, if they file your taxes late or make an error in your tax return, then you may be able to sue them for professional negligence.

• Not keeping up with change

Your chartered accountant should be up-to-date with the latest tax laws and changes in the accounting industry.

If they’re not, they might miss important deadlines or make mistakes in your filings. Every tax code should be reviewed and updated every three years, so if your accountant is not doing this, they are not staying on top of their game.

Now that we’ve gone over some reasons, an accountant may be considered incompetent. Let’s explore what you can do if you find yourself in this situation.

What can you do if you have an incompetent accountant?

• Don’t panic!

We know this is not what you wanted to hear, but the first thing you need to do is take a step back and calm down. Pinpoint the specific areas where your accountant is falling short.

Once you’ve done that, you can start to think about what your next steps should be. Decide if you want to give them another chance or if it’s time to find someone new.

Yes, this will require time and patience as the new accountant familiarises themselves with your company’s finances. But it will be okay.

• Sit down with your accountant

If you’ve decided to continue working with them, you next need to have a sit-down meeting with your accountant. In this meeting, you should:

– Clearly explain your expectations and what you need from them

– Find out why they are falling short

– See if there’s any way to help them improve

– Give them a chance to explain themselves

This meeting is crucial because it will allow you to see if there’s any way to salvage the situation. Sometimes, an accountant may not be up to par because they’re overwhelmed or undertrained.

In other cases, they may try their best but are not a good fit for your business. Either way, it’s essential to have this meeting so you can make an informed decision about what to do next.

• Report them if necessary

An incompetent accountant can cause serious problems; in some cases, you may need to report them to the authorities. This is usually only necessary if they’ve committed fraud or embezzlement, but it’s something you should keep in mind as an option.

Reporting them to relevant accountant bodies like CPAs can also help ensure they don’t end up working with other businesses and causing them the same problems.

• Time to let your accountant go?

If you’ve decided that there’s no salvaging the situation, your only option is to fire them.

In most cases, this is a pretty straightforward process – you just need to give them written notice that their services are no longer required.

However, in some cases, it may be a little more complicated. If you’re in the middle of tax season, for example, then firing your tax accountant can cause some challenges.

In this case, you may need to find someone to fill in for them on short notice so that you can get your taxes done on time.

But tax season should not be the reason why you’re stuck with an incompetent accountant.

• Find a new accountant

There are a few things you should keep in mind when looking for a new accountant:

– Make sure they’re qualified and have the right experience

– Ask for referrals from other business owners

– Meet with them in person to get a feel for their personality

– Get everything in writing before you hire them

Making sure you find a competent accountant is essential, but it’s also necessary to find one that’s a good fit for your business.

How to avoid hiring an incompetent accountant

The question now is, how can you avoid landing with an incompetent accountant in the first place? The answer is quite simple; do your homework. When looking for an accountant, make sure you:

• Check their qualifications and experience

Every chartered accountant must have a degree in accounting and pass a professional exam. In addition, they should also have a few years of experience working in the field.

You can check their qualifications by asking to see their certificate or calling the relevant accountant bodies.  Always ask for references.

Anyone who wants to come close to your books should, at the very least, know basic accounting practices. If not, how would you expect them to handle complex tax issues like tax liabilities and claims from the Internal Revenue Service (IRS)?

• Get referrals from other business owners

A good accountant will have no problem giving you the names and contact details of some of their previous clients. In fact, they should be more than happy to do so.

Most small business owners are happy to give referrals because they know how important it is to help other small businesses.

In addition, you can also ask your family and friends if they know of any good accountants in the area.

• Turn to technology

We are in a digital era, and there’s no reason you shouldn’t use technology to your advantage. Platforms like LinkedIn and Twitter are fantastic ways to connect with the best in the business.

Even a  simple Google search could yield good results. Just type “accountants + [your city]” into the search bar and see what comes up. In most cases, you’ll be able to find a few qualified candidates that way.

• Experience with accounting software

A great accountant will use cutting-edge technology to provide their clients with a better service. They should be familiar with most accounting software like Quickbooks and Xero.

Accountants are now using artificial intelligence (AI) and machine learning to automate the reconciliation process and spot accounting errors.

A program like Envoice, which uses OCR to capture data from invoices, is a prime example of this.

Make sure you ask your potential accountant about the technology they’re using to see if it’s a good fit for your business.

• Meet with them in person

Once you’ve narrowed down your list of potential accountants, the next step is to meet with them. This is important because it will give you a chance to get a feel for their personality and see if they’re someone you’ll be able to work with long-term.

In addition, this is also an excellent time to ask them any questions you may have about their experience or qualifications.

• Get everything in writing

Before you hire an accountant, it’s crucial to get everything in writing. This includes their fees, the services they’ll provide, and how often they’ll be billing you.

Having a clear written contract will help to avoid any misunderstandings down the road. In addition, it will also protect you if something goes wrong.

• Keep communication channels open

Have regular meetings with them to discuss your finances and keep them up-to-date on any changes in your business.

Most accounting software is now cloud-based, which means your accountant can log in and check your books from their office. But have an official communication channel to get in touch with you when they need to quickly.

• Ask for alternative communication methods

One of the most frustrating things about being a small business owner is trying to contact your accountant only to be told they’re busy and will get back to you later.

Or worst, your tax return preparer does not return your calls.

This is why it’s essential to ask for alternative communication methods. It could be an email address, a direct line, or even a WhatsApp number.

Ensure that you can get in touch with your accountant promptly, even when they avoid phone calls.

• Regularly check your books

Small business owners are busy and may not have the time to check their books constantly. However, it’s essential to make a point of doing so regularly.

This doesn’t have to be daily or weekly, but you should aim to do it at least once a month. Checking your books will help you spot any potential problems early on and avoid situations where an incompetent person is in charge of your finances.

It should be noted that good accountants will help their clients proactively by providing regular financial reports. But as a business owner, you should also take the time to understand your numbers.

• Hire someone you can trust

Last but not least, it’s essential to hire someone you can trust. This is especially true for small businesses because they often don’t have the same resources as larger companies.

We’ve seen too many corporate fraud and embezzlement cases in the past decade. But just because there have been a few bad apples doesn’t mean you should lose faith in the profession. There are still plenty of competent and trustworthy accountants out there.

When you hire an accountant, go with someone you can work with for many years, not just someone who’s cheap or convenient. In the long run, it will be worth it.

Go with your gut and hire someone you feel good about.

Conclusion

By finding a competent and trustworthy professional from the start, you can avoid many headaches from an incompetent accountant.

Don’t be afraid to ask questions, get everything in writing, and keep communication channels open. And don’t be scared of change – there are too many accountants who are good at their jobs to waste time on those who aren’t.

Further Reading:

• Accountant not responding? What to do about it
• 7 reasons your business should be working with AI bookkeeping
• How much does an accountant cost for a small business?