Competition in accounting software has increased markedly, with passionate accountants and bookkeepers on many sides. But there is rising concern over whether some partners are pushing one type of accounting software in return for commissions.
Software should be chosen on a range of factors: accessibility, ease of use, a modern application and environment, processes, natural business systems. In short, does it help the business do business?
But instead of evaluating their own organisation’s needs, business owners sometimes defer the decision to a trusted adviser. This does not always give the best results.
I do question a business that chooses software on recommendation from an accountant who they talk to just once a year – and without consulting those that run and monitor their business every month. Who knows how the software will be used? And why is a particular solution being pushed.
I also continue to feel uncomfortable with software being selected by accountants based on the commission to the adviser. Informing the client about the “benefit” is not only appropriate it is also required under some ethical rules.
All software companies pay commissions to varying extents. When BankLink began providing an electronic transaction service directly to accountants, they received a cut of the fee for every single line of data on a “bank statement”. I wasn’t comfortable with this practice then and I remain uncomfortable with it now.
How should you deal with such commissions and benefits from software used by your client?
This is a conflict that requires a professional to consider and take action. There are well established principles and procedures for the disclosure of these types of conflicts. See Accounting Professional Ethical Standards APES 110 or the ASIC guides for Financial Planners.
Accountants and bookkeepers are obliged under the code of conduct in the Tax Agent Services Act 2009 to maintain independence. “You must act lawfully in the best interest of your client and you must act honestly and with integrity.”
Please note just because there is a conflict does NOT make it a bad thing. (A discussion for another day.)
Are commissions to accountants and bookkeepers a problem? Join the discussion on LinkedIn.
In my view a professional must:
- Make software recommendations to their client based on what is best for the client and their business, and not because of any incentive.
- Recognise where a relationship with software company may give a benefit to the adviser.
- Disclose to the client the benefit received.
Accountants and bookkeepers should be working together for the best outcome for the client. If the software gets cheaper or there are other benefits then the client probably should know about it and ultimately benefit as well.
I recommend bookkeepers use the ICB’s disclosure form, shown below.
A version of this post appeared in the Institute of Certified Bookkeepers July newsletter.
DISCLOSURE REQUIRED
Dear Client
DISCLOSURE
As you are aware we are a Professional Partner with software company ___________.
This enables us to be closely aware of their ongoing developments, participate in their training and information sessions and benefit from knowledge and loyalty schemes.
1/ As a partner with Xero, we have a number of clients using the Xero software. As you are aware your Xero subscription is paid for by our firm and onbilled to you at a fee of $ per month. Due to our partnership with Xero and the number of clients we have on Xero we receive a discounted price for purchasing your subscription from them (of $x per month). As A _____ level partner we have also become eligible to receive practice management software provided by them for no cost.
2/ As a partner with MYOB / Reckon, we have a number of clients using their software. As you are aware your software subscription is linked to our partnership with them and accordingly we receive a commission of $___ / __% per month. We have chosen to have any such commission put towards our software licencing costs to the software companies..
3/ As a partner with Intuit’s Quickbooks Online we are eligible to receive free practice management software from them.
Please contact us if you wish to discuss any aspect of this matter.
Yours faithfully
