By any other word would smell as sweet.
While the scent of a rose is perhaps more important than what we choose to label it, understanding specific labels or designations—as well as what those labels mean about an individual’s competence—is vitally important in the business world. What’s the difference between a CPA and a CA, and a CMA and an RIA, and a CGA and a CFP and an RPA? How do you tell the difference?
I remember back to a time shortly after I had passed the UFE (Uniform Final Exams) and earned the designation “Chartered Accountant”, aka CA. I was proud as could be at having passed the demanding UFE finals, which at the time comprised sixteen gruelling hours of testing taken over four consecutive days. It was the toughest set of exams I ever studied for, so “CA” was a suffix well-deserved.
My indignation aside, those two letters after my name say a great deal about who I am and what I can do professionally. The larger issue illustrated by this story is that those letters after someone’s name, if you can understand them, will tell you what he or she can do for you.
In my research into all this alphabet soup, I came upon (what was to me) an obscure designation: the RPA (Registered Professional Accountant). When I logged onto their website, the homepage directed me to the requirements for qualification and membership, which appeared to be very demanding. I then clicked on “Why Choose an RPA Qualification?” Not to diminish RPAs, but the only reason I found for becoming an RPA, apart membership in a “highly esteemed” society, was to enable me to guarantee passport applications—which isn’t an activity I’ve ever been desperate to do.
So if I, a financial professional, don’t understand the reasons for various designations, where does that leave you?
I’ll give you a hint: caveat emptor—or, for those who aren’t Latin enthusiasts, buyer beware. You must define the service you need and which professional will suffice. Googling your business need will make you familiar with the options at your disposal. For example, typing in “back pain” may bring up MDs, DCs, and podiatrists, each with a different type of expertise.
The process is similar when dealing with accounting professionals. The primary needs of most small-business owners are record keeping, financial reporting, and tax compliance.
For bookkeeping, there is no license required. Financial reporting, though, is slightly more advanced.
There is no legal requirement for a licensed individual to prepare financial reports. Of course, depending upon how you will use and who else will use your reports, it may be necessary to engage an independent licensed practitioner who will attest to the accuracy and completeness of your financial reports. Complete and accurate reports are especially valuable if you are ever seeking outside financing for your business.
You can prepare your own financial reports and tax returns, but the man who is his own physician has a fool for a patient. It’s impossible to become an instant accounting and tax expert, and if you make a mistake, you usually don’t discover it until it’s too late to fix it—or until the provisions of the income tax act impose penalties on you.
There are many accounting service options available to your business at various price points, and it is your responsibility to hire the appropriate expert to do the job for you. Don’t hire a bookkeeper if you need audited financial reports. Don’t hire a CFP if what you really need is an internal auditor. Ask before you engage. Direct your questions both to the individual and to their professional council or society—you are the public that these societies were formed to protect.
You shouldn’t squander your money on services you don’t need or on under-qualified individuals. But there is also nothing wrong with matching the level of expertise and cost to the desired results. You don’t need a CA to do your bookkeeping, nor can unlicensed bookkeepers conduct a professional audit. So just as you would take care to select the right healthcare practitioner for a given illness, you need to select the right “wealthcare” practitioner for your needs. The financial livelihood you save may be your own.
Your Wealth Warrior, Sid Karmazyn, is a Chartered Accountant, author, and speaker. Your questions and comments are welcomed. You can reach Sid directly at 905.771.3813, fax: 905.771.3810, or by email at skca@idirect.com.