When you operate your own business, you need a good accountant. But, what if your accountant isn’t worthy of your trust?
Sometimes problems crop up with an accountant that can simply be attributed to poor communication or mismatched expectations – and those can often be easily resolved. Other times, however, red flags in your accountant’s behavior can signal deeper problems (like incompetency or illegal activity).
What are some signs that an accountant isn’t trustworthy?
Your accountant should provide clear and transparent explanations of your financial matters. If they are vague or reluctant to answer your questions, it may indicate that they have something to hide. Other red flags include:
- Inconsistent or missing documentation: If your accountant fails to provide or maintain proper financial records, receipts or documentation for your transactions, it can be a sign of negligence or dishonesty.
- Sudden changes in financial statements: Unexplained and significant alterations in your financial statements without a reasonable explanation should raise your suspicions. Your accountant should be able to justify any changes made to your financial records.
- Compliance issues: Repeated issues with tax authorities, audits or inquiries suggest that your accountant is not following the law or providing accurate information.
- Unexplained fees or charges: If you notice unexpected or unexplained fees on your invoices, it’s important to question your accountant about the charges.
- Questionable financial device: If your accountant provides advice that contradicts financial best practices or seems “too good to be true,” it’s essential to seek a second opinion.
- Unexplained access or control: If you find that your accountant has unauthorized access to your financial accounts, or if they refuse to relinquish control over your financial accounts or records when requested, that’s a serious breach of trust.
- An inability to explain processes: A competent accountant should be able to explain their processes and your company’s financials to you in plain language. If they can’t, that’s a sign that they may be deceptive.
Finally, if your accountant pushes you to engage in financial activities that you find ethically or legally questionable, such as hiding income or inflating deductions, this is a clear sign of untrustworthiness. Ultimately, if you find that your business has been harmed by the negligent or deliberate actions of your accountant, you may want to consider taking legal action.