Money

How to understand your accountant

Allan Johnson of Johnson & Tennent Chartered Accountants
Allan Johnson of Johnson & Tennent Chartered Accountants Janie Kayes

IF YOU don't know how to understand your accountant, now is a good time to start thinking about it!

We're almost halfway through July, so if you haven't already booked an appointment with your accountant, chances are it's going to happen.

I'm not talking about touchy-feely understanding, but understanding the numbers that accountants love to produce.

These numbers tell a story about your income position and possibly your wealth creation process - and you need to know how to understand your accountant to make sure you get maximum value from the money you invest in their services every year.

I often hear people say, "I don't need to understand my accountant - that's why I employ them!", but unfortunately, this has caused many problems, particularly for business owners.

You should know your financial affairs, even at a broad level, so you don't need to know the nitty-gritty to get value from the reports your accountant produces. It's okay to delegate the accounting function, but you can't delegate responsibility for your financial decisions - and accounting reports will help you make better decisions.

Accountants have previously done a great job of convincing people that finances are complex - but I've got a surprise for you. It doesn't have to be that hard! If you can keep track of your household finances, you can understand more complex accounting reports.

Like most things, it will take some initial effort to learn the basics, but once you have mastered that, you will be able to have an intelligent conversation with your accountant. Won't that be fun?

So, how do you understand your accountant?

1. You need to overcome negative feelings regarding accountants and their reports.
Most accountants are nice people (just misunderstood!), and can be very helpful. You need to set a goal to develop a positive relationship with your accountant. This has to be your decision, and you will find that it's a win-win situation at the end of the day.

2. Do your homework.
As I said above, you do need some basic understanding, but it is basic and definitely achievable by nearly anyone.

You do not need a detailed understanding of the processes of turning raw financial data into accounting reports.

All you really need is to understand the end result, which normally will be a tax return or a profit and loss statement and balance sheet. Once you have mastered these, you can graduate to budgets and cash flow reports.

So where do you go to get this knowledge? If you've passed Step 1 and already have a good relationship with your accountant, the obvious answer is to ask them. If not, the Internet provides a wealth of information at your fingertips - just make sure it's an Australian-specific site.

The important thing is to do something, and work towards understanding your accountant.

Topics:  allan johnson, opinion



Join the Community.

Get your local news, your way.

Stay Connected

Update your news preferences and get the latest news delivered to your inbox.

Health District blamed for Tweed Hospital funding blunder

Lismore MP Thomas George and Tweed MP Geoff Provest look at the draft North Coast Regional Plan, as the Tweed Heads is recognised as a regional city for the first time.

MP calls for heads to roll as costs blow out to $80m

Man on the run for 15 years caught in cupboard

Tweed/Byron LAC Superintendent Wayne Starling, Australian Federal Police Gold Coast Airport Superintendent and Queensland Inspector Greg Baade at the AFP headquarters at Gold Coast Airport on Tuesday.

Man wanted for 15 years captured in cupboard in cross-border blitz

Police release CCTV footage after Tweed River death

Police are investigating the suspicious death of Michelle Lord after the car she was in crashed into the Tweed River east of Tumbulgum in October 2015.

Police release CCTV footage of Michelle Lord's last hours

Latest deals and offers


CCTV of Michelle Lord's last night alive

Police have released this CCTV footage of Michelle Lord with her partner. They are...

ACF take Minister to Court

ACF chief executive Kelly O'Shanassy

The Australian Conservation Foundation go to court to stop Carmichael mine.

Dash Cam: Roo takes on car

Kangaroo leaps car.

Kangaroo could have kept going, jumps car instead.

How a sacked real estate agent made $725k in four months

Agent is now under investigation by the industry watchdog

VIDEO: Art Deco fan pays $835,000 for Imperial Hotel

No Caption

Iconic "Impy" sold at a bargan price to bidder who loves Art Deco.

RBA warns of future apartment oversupply

Toowoomba: Crest Apartments and Burke & Wills, Ruthven Street ( view from Neil Street) Photo Bev Lacey / The Chronicle

RBA says oversupply of apartments poses risk to household finances