How Do I Change My Accountant?

Posted by Chris Hooper on 13.05.14 in Glossary


Most of us would not think twice about changing our brand of toothpaste or trying a different brand of car. But there are some services that people are notoriously reluctant to change. Most of us have used the same bank for decades even though it is easier than ever to move to a new bank. The same phenomena exists in the accounting profession where clients are notoriously loyal – even if they are dissatisfied with the service they are getting. Even when customer satisfaction is low there is a reluctance to change service provider. So, why is this? I believe it is largely due to:

  • Perception of the hassle involved
  • Perception of the risk involved
  • Reluctance to send a negative email to their existing accountant
  • Scepticism about whether the new accountant will be any better

In this blog post I will describe the actual process for making the switch and also look at the reasons for considering a change of accountants.

How do I change my accountant?

The accounting profession has a clear procedure in place for clients who decide to change accountants. It is more common than you might imagine and all reputable accountants will remain completely professional throughout the transition. The steps are as follows:

  1. Client gives notice. The client writes to their existing accountant and gives notice. A brief email is adequate and should include details of which companies or services are to be moved and the effective date. The email should also include the new accountant. This is important because your existing accountant must have something in writing from you before they will release your records to your new accountant.
  2. Professional Clearance. Once you have given notice your new accountant will write to your outgoing accountant to request professional clearance. This is part of due diligence procedures. Professional clearance is a courtesy between accountants to highlight any issues they may have had with a client. This could include poor payment history or concerns over the honesty of a client’s accounting disclosures. It is in place to identify unscrupulous clients rather than simply transferring them to another accountant.
  3. Due Diligence. All accountants operating under the compliance structure of an accounting body must conduct due diligence before taking on new clients. This is part of an accountant’s responsibility to help combat fraud and illegal money laundering. In practice due diligence is straightforward. You will be asked to provide current proof of your identify and address and will need to provide a copy of your company’s certificate of incorporation. You will also be asked to sign a Letter of Engagement that outlines your responsibilities and those of your accountant.
  4. Transfer of Records. Once the above have been completed your outgoing accountants will transfer all records held on file to your new accountants. If records are held electronically this should happen fairly quickly. It may take longer for paper records but most accountants are keen to close off their responsibilities once they have lost a client.

If you are concerned about any fees you may owe then ask your existing accountant for a statement of any balances owed before giving notice. This will give you a clear view on what you may owe for any work they have already completed on your behalf. Most accountants will not charge for the actual transfer of records itself. It would only be normal to charge a fee for this service if it involved a significant amount of work. This is unlikely to be the case for small businesses.

Top ten reasons to change accountants

  1. Poor client service e.g. phone call or email response is slow
  2. Not helping you save enough tax
  3. Poor value for money and unexpected fees
  4. Focused on last year’s accounts rather than future profits
  5. Agreed deadlines are not met
  6. Not proactive about highlighting opportunities
  7. Lack of technical knowledge
  8. Your business has outgrown their services
  9. Use too much jargon
  10. Lack of rapport or chemistry

There are many reasons people decide to change accountants and the above is only a small selection. In summary, if you feel you could get a better service elsewhere then you probably can! Contrary to popular perception accountants are not all the same. In fact accountants come in all sorts of shapes and sizes and the trick is to find the right one for you.

How do I find the best accountant?

Many individuals choose their accountant on the strength of a referral from a friend or fellow business owner in their network. This is often an excellent approach but it is important to consider if your needs are the same or not. Below are some of the key factors to consider:

  • Large practice or sole practitioner? Selecting the right size of accountancy firm is absolutely critical because this will have a big impact on the type of service you receive. While some large firms do provide a responsive service it is more common for clients to get passed around different people in the firm. You may like the original accountant you started with but it is common for staff to rotate within the firm as they gain experience in different areas or get promoted. A small firm or sole practitioner will not have the same depth of technical knowledge. This may be an issue if your business has subsidiaries in different countries or a particularly complex tax structure. Otherwise any qualified accountant should have the technical skills to meet your needs.
  • Experience and knowledge. While all qualified accountants should make a proficient job of your annual accounts and tax return you ought to be a bit more choosy. What are the areas that are most valuable to you and your business? Once you have identified these you are one step closer to finding a match. Do you just need year end accounts preparing or would your business benefit from regular management accounts and ongoing support? Do you have a particularly complex tax arrangement with your business or family such as using a series of trusts? Would you get more value from an accountant that has some experience in industry as well as the accountancy profession?
  • Location. With the growth of internet services you really can use an accountant that you have only interacted with through the internet. Cloud accounting packages and video conferencing through Skype have made this a reality. That said, it will be much easier to build a relationship if you have met someone face to face.
  • What else will they help you with? The actual preparation of final accounts and tax returns is only a small element of what accountants do. You should have much higher expectations of the value your accountant provides. For example, do they have knowledge and experience of business software and systems? A good accountant can help you make your systems more efficient through software automation. Does your accountant have tangible business skills? A good accountant can help you identify areas that need attention in your business and takes the time to help you find solutions. They can help with business plans and forecasts and help you obtain finance for investment. While they will not be a specialist in everything they should have a good network of other professionals in your local business community.
  • Fees. Accountants have to undergo a huge amount of training in order to qualify and many go on to gain further specialist qualifications in other areas such as taxation. This is a knowledge industry so expect to pay a reasonable rate for a good accountant. If something seems very cheap then you may have cause to be suspicious. Is the accountant properly qualified and running under the compliance regime of their accounting body? Are they using accountants offshore in India to actually do the work? A reputable accountant should provide clear information about exactly what they are charging for and what their fees will be. This should be agreed in advance of work being completed. Many accountants now offer a bundle of services for a fixed monthly fee. This is often advantageous to both parties as long as the services included are clearly defined.
  • Personal rapport. Although I’ve included this last it is one of the most important factors. It is important for several reasons. If you are on the same wavelength as your accountant then you will find it easier to communicate. Some accounting principles are complex to understand so effective communication is important for both parties! You also need to be comfortable asking your accountant questions without worrying that they will give you an answer you do not understand. Trust is absolutely central to any relationship and is particularly important if someone will be looking at your finances. Do you trust your accountant to be professional and discreet? Just as important, do you trust their judgement when it comes to matters of business strategy and development?

I hope you have found this guide about how to change your accountant useful. There are over 20,000 accountants operating in the UK so there should be the perfect accountant out there for you! Shop around and make sure you consult your top two or three before making any decisions. Good luck!