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A literal clear through a fog.
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Do you recognise your own accounts?

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Richard Murphy advises the director of a company on the presentation of accounts, and how to make sure the accounting data is comprehensible to the non-accountant.

24th Jan 2020
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One of my big interests in life is making accounting data comprehensible to those who need to use it, other than those of us who prepare the accounts. I am often reminded that accountants don’t always pay much attention to this. 

Recently, I was discussing the accounts presented by the auditors to the directors of a company for approval. I had been asked by a friend, who is a director of the company in question, for my opinion on the accounts.

Leave aside the number crunching for a moment, what I asked my friend was whether or not he recognised his own company in the data that was presented. He looked confused. So, I reminded him that the accounts he was looking at were his responsibility, and were legally prepared by him and his colleagues. The auditors were voluntarily asked to undertake that enhanced task by the company in question to help their credit rating, and were merely their hired hands in the task of actually preparing the report. Apparently, this was not something that had occurred to him.

Being familiar with the company in question, I then asked why its logo was not on the front cover. As far as I could see, the company emblazoned that device on just about everything associated with it, including the staff t-shirts.  

Then we read the auditor’s description of the company’s trade, which was perfunctory. I noted that, despite the considerable investment the company seemed to have made in its website, there was no mention of the company in the accounts. In fact, their physical address was not there either since they use the auditor’s premises as their registered address. It did not take long for my friend to get my point.

Below is a list of the things I would include in any accounts I was preparing for a client now. I  would include all these items in the directors’ report and file it at Companies House as publicity for a company, which is permitted even in abbreviated accounts.

The company logo

If it has one, put it on the front cover at least. And why not in the header or footer of other pages as well?

A description of the company’s trade

If the company has a web site and a neat description of its trade, use it. Why not? And don’t be too modest. Nothing says the accounts cannot promote the trade of the company as long the information you include does not conflict with the information in the accounts. 

The company’s address

Most companies want new business. Why, when it comes to accounts, are so many anxious to hide from view? Companies House is free advertising, and people do look there. Do tell them where to find the company in real life as well.  And add the phone number and email address.

The website

It the company has a website, why not plug it? How long does it take to add a link to the accounts? 

Social media 

If the company is on Twitter, Facebook or anything else, add the link. Show the logos. Make it clear that this is where the company keeps people up to date, but only if that’s true of course. 

Pictures of the directors

No large company would dream of putting out an annual report without pictures of the management team. There is a good reason for that: they think it sells confidence in the company. If doing so is good enough for them, then why not do it for your clients? If the pictures are already on the web site, then why not? It will only take a moment in that case. But do respect copyright (just in case the company does not own it).

Use your imagination

If the company has favourite things it wants to promote – like a charity it fundraises for – add that as well. It’s all good PR. Again, copy available text wherever possible. 

How much would any of this cost? I’d suggest very little indeed for most of them – they may well be little more than copy and paste. In that case, some of these seem worth doing as a matter of routine. And to offer the rest as a small add on service seems like a really good idea. It shows you care. It shows you want to add value. And it shows the client that you think the accounts are important. And because it turns even abbreviated accounts into useful data, you will really be adding value for clients. 

Replies (10)

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Stepurhan
By stepurhan
24th Jan 2020 13:56

"Companies House is free advertising, and people do look there."

People look there when they are already thinking of working with a company. They don't look at random sets of accounts in hope of finding someone they can work with.

Another bizarre article from Mr Murphy.

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Replying to stepurhan:
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By Brend201
24th Jan 2020 14:36

stepurhan wrote:

"Companies House is free advertising, and people do look there."

People look there when they are already thinking of working with a company. They don't look at random sets of accounts in hope of finding someone they can work with.

Another bizarre article from Mr Murphy.

Sorry to disagree. You are taking a narrow view and are being unfair to Mr Murphy, in my opinion.

In my case, my main purpose in looking at accounts at Companies House is to identify the significance of competitors and to assess suitability for potential acquisition. Yes, we do "look at random sets of accounts in hope of finding someone [we] can work with".

I would also be impressed if I saw an impressive set of accounts with branding etc for a potential supplier or customer.

I like the suggestions made in the article.

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Replying to Brend201:
Stepurhan
By stepurhan
24th Jan 2020 16:19

Brend201 wrote:

In my case, my main purpose in looking at accounts at Companies House is to identify the significance of competitors and to assess suitability for potential acquisition. Yes, we do "look at random sets of accounts in hope of finding someone [we] can work with".


It does not sound like you are looking at random sets of accounts. It sounds like you are looking at specific sets of accounts. Accounts where you have identified companies of interest and would already know their contact details and website, thus not needing them "advertised" to you in those accounts.

I also find it hard to believe that a bit of branding would influence you once you've reached the point of looking at the accounts. Has anyone ever said "They have negative net assets, but their accounts look nice so let's buy them"?

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Replying to stepurhan:
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By AndyC555
25th Jan 2020 11:55

I agree with Stepurhan. The article appears to be the product of a random thought generator.

If I'm looking for a potential client or service, I'd start with 'Google' not Companies House. What on earth would your search criteria be on Companies House? All you get there to search for are company name, number and names of directors. Good luck with that if you're looking for IT support in Hampshire.

Why would anything ever be available to view on the company accounts filed at Companies House about what the company does that wouldn't already be included in an infinitely easier to find website?

Does Mr Murphy follow his own advice, I wonder. Are his accounts embellished with logos, lists of services provided and biographies and pictures of the directors? And if they are, is any of that missing from his website?

Bizarre indeed.

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Richard Murphy
By Richard Murphy
27th Jan 2020 10:13

Thanks for the comments.

I have to admit that I do not quite follow the logic of all of them.

I am not for a moment presuming that Companie House is used for random searching. Nor do I presume it is about pitching companies for sale. But I do think accounts have a purpose, and one of those purposes is to very definitely help the company sell.

If an accountant does not understand this, how can they add any value? I am bemused that the nmost basic of marketing suggestions receives such a hostile reaction. It suggests that accounting is seriouysly out of line with commercial thinking, and that is worrying.

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Replying to richard.murphy:
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By AndyC555
27th Jan 2020 10:27

"accounts have a purpose, and one of those purposes is to very definitely help the company sell."

How often has anyone reading this bought anything based on a look at a set of company accounts? I'm looking to buy a new car so I compare the accounts of BMW and Mercedes, because there's no information more readily accessible elsewhere?

"It suggests that accounting is seriously out of line with commercial thinking"

Really? I'm not a marketing expert, perhaps Richard is, so could he show us any links to marketing strategies based on using a company's accounts to market their products or services? I assume that if Richard is 'in line' with current commercial thinking that's where he picked up the idea from.

Unless everyone is out of line with Richard's thinking?

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Replying to AndyC555:
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By Tandy
28th Jan 2020 11:18

Having blessed the world with his musings as a "political economist" and a so called "academic" it is our turn to put up with his nonsense

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Replying to AndyC555:
paddle steamer
By DJKL
31st Jan 2020 21:57

One does buy say building contracts/tendering partly on accounts, however it tends not to be accounts dragged from Companies House but accounts requested from prospective construction companies.

I do sometimes look at things as silly as even the names of the accountants who prepared the accounts, is it M Mouse Accountants or someone I actually recognise.

I review quite a lot of accounts in a year but of course for most I need to get "real" accounts direct from them as the stuff on Companies House is a waste of space re smaller entities.

Not fussed re a logo but web address could be useful, especially if trading name differs from company name, names of accountants an solicitors may add something and whilst pictures of directors are likely pointless, and I can get names of them anyway on Companies House, a CV either in accounts or on website can add value.

However what we do not want is quoted plc reports where everything your never wanted to know is in a graph or pie chart. There ought to be short form basic published accounts and the Report as a distinct document, if you want to print these things you kill forests (and I do like to have printed accounts and go through them writing in the margins)

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By Brend201
28th Jan 2020 11:28

Maybe I have missed some undercurrents elsewhere, but I am surprised at the hostile tone and ridicule of some of the responses. What has Richard Murphy done to people to merit it?

I saw another thread recently where someone asked a question, was asked for further information and then responded with something like "you have all the information, why don't you answer the question?" What is this site coming to?

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By Mike Bath
29th Jan 2020 16:47

All valid points, each of which adds to the quality of the accounts and to the costs of preparation. If the directors are engaged enough in using the FS as a communication tool and are prepared to incur the small amount of extra cost, then fine. The reality in many cases is that they're not. Whether they should be is a different debate.

Using FS to generate engagement is an area that smaller charities are getting better at. I did an exercise a few years ago where just the Trustees' reports from different charities (charity names redacted) and we were invited to consider which one we'd be most inclined to give money to, solely based upon their description of their aims and activities.

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