Do you recognise your own accounts?
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.
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.
It the company has a website, why not plug it? How long does it take to add a link to the accounts?
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.
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Richard Murphy is a practising chartered accountant and professor of political economy at City, University of London. He is also director of the Corporate Accountability Network. After twenty years in industry and commerce, he co-founded the Tax Justice Network and Fair Tax Mark before taking his current positions. He co-authored the original...