DaBogu:
This is something I wish I had known years ago when I was employed as an accounts personnel to small business. I had to learn it by experience. I remember one day my madam walked in and saw me at my sit and she said what do I even do here apart from press computer then she gave me fliers to go out and start distributing since according to her I am usually jobless �

Looking back now I can see areas I could have made more impact instead of just recording sales and producing P&L reports every month, something she never even paid any attention to...at the time I couldn't figure out what exactly I was doing wrong and how she could not see that I was working...number 2 point sums it all up.

Rubyjade:
I have yet to meet a CEO who considers the accounting implications of a transaction while making business choices.

I mean one that will ask "what does IFRS or GAAP say about this transaction?"

Frankly, IFRS and GAAP matter little in making critical business decisions.

This is especially true for small business owners who do not have accounting ability or accountability partners (or board members).

They believe the accountants will figure it out.

As a result, the accountants are left to pick up the slack.

That is fine if everything goes according to plan. Otherwise, two serious issues arise:

1. The accountant may not fully understand the transaction and must be creative to record it. (In small businesses, accountants are typically afraid to press owners to explain transactions, while owners are often certain that they do not have to justify anything.)

2. During the recording process, problems that should have been fixed prior to execution are often detected. It is too late to stop the bleeding.

These two scenarios are common in unstructured SMEs.

Owners and stewards make these decisions with the best of intentions, regardless of the consequences.

The next steps:

I do not have all the answers, but here are some insights:

1. Business owners should trust the specialists (including accountants) they have employed to carry out their responsibilities competently and, more importantly, with integrity.

2. Accountants should not simply sit back and wait for orders. They must show capability, competence, initiative, and business savvy. Their supervisors will consider them as financial counsellors rather than bookkeepers as a result.

Not easy to implement but worth it.

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Strategical:
Your observations are very correct and that is why MSMEs last for few years and fizzle out very quickly here. Business decisions by entrepreneurs are mostly made without recourse to financial information and metrics generated from the operations of the entity but largely on the whims, moods, experiences of the owner(s) or experiences of others etc which in turn are based on trial and errors.

Secondly, most accountants lack the training (from school or work experience) to appreciate the importance of practical application of accounting knowledge in real life in their working places especially using Cost Accounting, Management Accounting, Financial Accounting, Tax Accounting and FIRS.

However in most cases the fault is not of the accountants but the faulty understanding of the role of accountants by business owners. This applies to the case of "DaBogu" above. Consider a scenario where a chartered accountant is engaged and s/he is the only person in the accounts department that has to analyse, classify, record and file each and every financial transactions of the entity. Also don't forget that the owner engages the same accountant to go deposit cheques or cash at the bank and many other unrelated assignments that end up taking up the time.

S/he is bogged down for the whole day trying to do the bookkeeping and figure out how to post or record some other items properly and this becomes a routine exercise repeatedly done day-in-day-out. With this scenario it becomes almost impossible for the chartered accountant to have time to think clearly about turning the financial data into useful information to aid decision making for the management like:

1. When and whether to buy new machineries or embark on capital projects
2. When and whether to recruit additional staff
3. When and whether to buy additional inventories
4. When and whether to expand operations
5. When, where and whether to source for additional funding for the business and what type of financing to explore
6. Whether to take on a new project, contract etc or not
7. What price to charge for the product or service
8. When or whether to change (increase or decrease) product or service prices and by how much
9. When, whether or where to open new branches

The above and many other business decisions require the impute of accountants before they are finalised.

Meanwhile in reality, there should have been someone else handling the bookkeeping tasks while the chartered accountant handles preparation of the periodic management reports and related analysis of the financials in a way to help management decision making exercises.

Strategical:
Your observations are very correct and that is why MSMEs last for few years and fizzle out very quickly here. Business decisions by entrepreneurs are mostly made without recourse to financial information and metrics generated from the operations of the entity but largely on the whims, moods, experiences of the owner(s) or experiences of others etc which in turn are based on trial and errors.

Secondly, most accountants lack the training (from school or work experience) to appreciate the importance of practical application of accounting knowledge in real life in their working places especially using Cost Accounting, Management Accounting, Financial Accounting, Tax Accounting and FIRS.

However in most cases the fault is not of the accountants but the faulty understanding of the role of accountants by business owners. This applies to the case of "DaBogu" above. Consider a scenario where a chartered accountant is engaged and s/he is the only person in the accounts department that has to analyse, classify, record and file each and every financial transactions of the entity. Also don't forget that the owner engages the same accountant to go deposit cheques or cash at the bank and many other unrelated assignments that end up taking up the time.

S/he is bogged down for the whole day trying to do the bookkeeping and figure out how to post or record some other items properly and this becomes a routine exercise repeatedly done day-in-day-out. With this scenario it becomes almost impossible for the chartered accountant to have time to think clearly about turning the financial data into useful information to aid decision making for the management like:

1. When and whether to buy new machineries or embark on capital projects
2. When and whether to recruit additional staff
3. When and whether to buy additional inventories
4. When and whether to expand operations
5. When, where and whether to source for additional funding for the business and what type of financing to explore
6. Whether to take on a new project, contract etc or not
7. What price to charge for the product or service
8. When or whether to change (increase or decrease) product or service prices and by how much
9. When, whether or where to open new branches

The above and many other business decisions require the impute of accountants before they are finalised.

Meanwhile in reality, there should have been someone else handling the bookkeeping tasks while the chartered accountant handles preparation of the periodic management reports and related analysis of the financials in a way to help management decision making exercises.