How I'd choose an accountant for a small company

If I were choosing an accountant for a small company, I'd first work out which of four jobs I was actually hiring for, and then ask who at the firm does mine. "Accountant" is one word covering all four, and they don't need the same person or the same papers.

Four jobs, one word

• The books: recording what came in and went out, month after month. My guess is this is most of the hours.
• Tax: the return, and turning up if the tax office has questions. This one needs an approved tax agent, and in 2015 the Inland Revenue Board warned that an unapproved one can't represent you in an audit or an investigation.²
• Company secretary: the statutory records and filings. A secretary needs a practising certificate, and must be licensed or belong to a listed body.³
• Audit: someone independent signing the accounts. An auditor whose approval has lapsed can't sign an audit report at all.⁴

One firm may offer the lot, and that's often convenient. I'd still want each job named on the engagement letter, because a package price is a good place to lose track of what you're getting.

Do you need the audit at all?

I'd settle this before meeting anyone, since it changes the whole conversation. Malaysia's rule is being phased in, and a private company has to meet two of three tests on revenue, assets and staff.¹

The revenue ceiling for audit exemption, in RM million

The look-back is what catches people out. You test the current year and the two before it, so one good year can spoil the run.¹

Exempt also doesn't mean finished. You still lodge unaudited statements, and a shareholder holding 5% can still ask in writing for an audit.¹ If I had a bank loan, I'd ask the bank what it wants before I dropped anything.

If you're exempt, you've mostly freed up a fee and kept the work. I wrote about what you're paying an accountant for in a quiet month, and that's the part you're really shopping for.

What I'd ask across the table

1. Who actually does my work, and what's their name? I'd want to meet that person, not just the partner.
2. Who do I call in March, when you're busy with everyone else's year-end?
3. Is the tax agent approved in their own name, and when does the approval run to? The tax office's 2015 notice says you can check the list on its portal, so I would.²
4. If the tax office writes to me, who answers it and is that in the fee?
5. What's outside the monthly price? I'd want the list in writing, with the extras priced.
6. How do I get my records back if I leave, and how long does that take?

The last one is my favourite. A good firm answers it in one breath, and I think the answer tells you how they see you.

What I'd ignore

I wouldn't care much about the size of the office or the length of the services list, or how modern the software sounds in the first meeting. A free first year of something wouldn't move me either, since the second year is the one I'd be living in.

The usual advice is to get a referral from another business owner. I'd do it, but I'd ask what happened when something went wrong, because almost everyone is happy with their accountant until then. The referral people are right about one thing: a stranger's website tells you nothing.

What's a fair price?

I couldn't find a current one. The Malaysian Institute of Accountants had a recommended audit fee guide, and one firm's page says it was withdrawn in 2015.⁵ That firm sells these services, so hold this loosely.

The old table it reprints put an audit at RM3,380 for a company with RM1 million in turnover.⁵ Its minimum was RM800.⁵ I'd use that only as a sanity check, and if a quote sat far below it, I'd ask what's being skipped.

For bookkeeping and secretarial work, I couldn't find a survey at all. The figures I can find are on firms' own price pages and they don't agree, so two written quotes with the same scope would tell me more.

When I'd walk away

• They won't say who'll do the work.
• They can't show a tax agent approval or an audit approval when the job needs one.
• They name a tax figure before they've seen the books.
• The engagement letter is vague, and they're relaxed about keeping it that way.
• They suggest something odd on the accounts and call it normal.

None of that needs a professional to spot. A tax dispute or an audit question does, and I'd take that to someone qualified, not to a blog.