At an accounting conference I attended last spring, the presenter was talking about the “Quickbooks slop” we practitioners get from our clients. This drew a lot of chuckles and universal agreement from everyone in the room.
The presenter used the “slop” comment in reference to a story about the good old days of accounting.
The story goes something like this:
Hooray for the Good Ol’ Days
In the good ol’ days of accounting, clients would bring us bank statements, canceled checks, and deposit slips each month.
We maintained the general ledger.
Bank accounts were reconciled.
The ledger was clean.
If there’s a well-maintained general ledger and reconciled bank accounts, tax time is a breeze. If formal financials need created, it’s easy because there’s always a clean ledger to pull numbers from.
As the story goes, this is how it was up until 15-20 years ago.
And then came Quickbooks.
Now, so the story goes, clients keep their own books, usually in a disastrous way, and they see no value in working with an accountant on keeping the books.
Instead of the accountant maintaining a clean general ledger all year long, now the client dumps their Quickbooks slop into our laps at tax time and we get to pick through it as best we can to create a salvageable tax return.
Did This Golden Era Really Exist?
I get skeptical when I hear people rail about some mythical “good ol’ day,” whether they’re talking about business or society.
Listening to my 73-year-old father and 98-year-old grandfather talk, I get the impression that the “good ol’ days” had plenty of problems. There were good things, and there were bad things.
Just like today.
So for accountants, is it really true that things were better with business clients “way back when”?
Retro Joe the Window Washer
I have a hard time believing that Joe the Window Washer was any different in 1995 or 1985 than he is in 2015.
Joe would never bring his bank statement and cancelled checks to an accountant for monthly or quarterly reconciliations.
Old School Joe the Window Washer, circa 1995, would have been the same as New Age Joe the Window Washer in 2015. He’d do a back-of-the-napkin tally of income and expenses in February, and hand that tally to his accountant to prepare the tax return for the prior year.
Bigger Businesses
I will concede that there may have been a good ol’ days with bigger businesses that have an office manager keeping the books.
Most of my clients who fall into this category do send me their things once a month for reconciliation, including a disaster-filled Quickbooks file. I spend most of my time fixing all the problems in the file.
This really isn’t the client’s fault, it’s more the fault of software that gives people a false sense of security. It’s all so easy! But it’s also easy to create trainwrecks in Quickbooks (or any bookkeeping software).
As long as clients in this boat have their file reviewed periodically, it works out okay. The best scenario would be for me to maintain everything myself, but clients see no value in that, and it’s a hopeless battle to fight. So the periodic tuneups are how it is.
The bigger problem here is the clients who need the monthly review but who choose instead to wait til tax time to get things to the accountant.
Call for Comments
I want to know what older accountants think. Was there a good ol’ days of of working with business clients? Or are this simply people reminiscing about a good ol’ days that never really existed?
JD
Hey, you know, everybody’s talkin’ about the good old days, right. Everybody, the good old days, the good old days. Well, let’s talk about the good old days.
I often talk about “the good old days” of tax preparation.
Those were the days, my friend –
* when a savvy tax preparer could “pull a rabbit out of a hat” and save a client literally thousands of dollars in federal income tax with “Income Averaging” or “10-Year Averaging” (and in doing so be assured a client for life),
* when credit card interest, auto loan interest and personal loan interest, as well as our tax preparation fees, were fully deductible,
* when “Employee Business Expenses” were an adjustment to income and not an itemized deduction subject to a 2% of AGI exclusion,
* when there was no such thing as an Adjusted Gross Income exclusion or threshold or the “phase-out” of a deduction or credit,
* before all the acronyms (PIG, PAL, ACRS, MACRS and so on),
* when one-half of long-term capital gain just disappeared from the tax return,
* and when the tax filing season really did end on April 15th (or actually April 16th for one client, who always came in to the office on the day after to do the prior year’s return).
Although there were more deductions and tax calculation methods back in the “good old days”, the 1040 was actually, in my opinion, less complicated than it is today. I did not have to deal with the AMT for any of our/my clients until the 1990s. And our work was limited to actually entering income and deductions on the return and calculating tax liability. We were not forced to be social workers.
My fondness for these days is, however, in no small part due to the camaraderie of working with my mentor in a storefront office and dealing with the “great unwashed masses”. At this point in my life and career I would not want to return to a storefront office and dealing with the great unwashed – but back then there was indeed never a dull moment.
As for the “good old days” of accounting –
I sort of miss the days of maintaining a manual general ledger – but I would never want to return to doing it all by hand (now 1040s are a different story). Back in “the day” very few of my mentor’s or my clients maintained their own books – they would give us bank statements, check registers, etc (in my mentor’s case often only once a year – at tax time) and we would maintain the manual general ledger. But the number of businesses we did was minimal – both our practices (his eventually became mine) were heavily concentrated on 1040 prep.
One benefit of doing books manually, especially when I maintained them on a day to day basis – if I wrote a check to pay a certain vendor a certain amount you could ask me two or three months later if I paid that particular bill and I would remember the specifics of the transaction. This is because I wrote the check by hand (often using a “one-write” system) and applied it to the specific accounts in the manual check register. Today when paying bills I simply hit a few buttons on the A/P page and multiple checks are generated. I don’t remember the who or what or why of what was paid two days later.
I currently maintain the QuickBooks systems for those business clients that I still have, and the one client that enters QB receipts and disbursements to the system attended the initial training class with me – so I do not have to worry about fixing client QB FUs.
RDF (aka TWTP)
RDF – great comments as always. I do sort of wish I could go back in time and see what the tax prep world was like “back then.”
[…] Dinesen, Was There Really a Good Old Days of Accounting? “So for accountants, is it really true that things were better with business clients […]
This is certainly a topic that accountants who work with small and micro businesses encounter ALL THE TIME. When I sit down with clients and we pull up their P&L and drill down into some of the accounts, they are almost invariably astounded at how messed up some of the numbers are. “But…I thought I was entering everything right!”
But client education is one of the challenges I enjoy about this field. By walking step-by-step through a transaction and then checking to make sure it is showing up where we expect it to on the financial statements, a light bulb moment often occurs and they begin to understand how the wizard behind the curtain works. (Those are the clients you want to clone.) But, alas, some clients’ records will always pretty much be QuickBooks run through a blender.
BTW, I really enjoyed the comments from RDF. Fun to hear those stories. (And to think that someday 2015 will be the good old days. Gulp!)
I agree, the education piece is the challenging but rewarding pieces. Seeing the lightbulb go off. As for the others, we adjust, adapt and do what we can.
JD-
I never felt like an “old accountant” until I saw your post 🙂
I came into accounting right before QuickBooks was a household name. It was 1993, I was 23 years old and just got married and I returned to school full-time to finish my BA in accounting. I wanted a part-time job in the field so I wouldn’t feel like I was mooching off my wife’s paycheck for the next 2 years.
So I got a job as an accounting clerk with a small manufacturer. Here is what my day consisted of back in ’93:
* The office manager would give me a bunch of orders that shipped.
* I typed up invoices in quadruplicate. Two went to the customer one to the shipping file and one to the accounting file
* I posted the invoice to the customer’s account card in the A/R posting tray
* I posted the invoice to the sales journal
* I posted the rest of the invoices and then created a summary card for the day
* I posted the summary to the A/R G/L control ledger and summarized the income in General Ledger
There were similar procedures for cash receipts, accounts payable, inventory control, cash disbursements and payroll. After a year I was promoted to accountant. The year after the moon and the stars must have aligned because I was graduating in May and the owner was granted a deal with QVC that increased sales 10X overnight. I started as their controller that June and stayed on for another 8 years before I found a new calling as an EA.
Here are some of the key differences between then and now:
* Accountants who worked pre-QB never have to stop and think “does this account need to be debited or credited”…It’s second nature even though our use of adjusting journal entries has been reduced by 99% due to computerized software.
* There is less clutter on the desk today. My desk in ’93 had six posting trays, an adding machine and a typewriter.
* An pre-QB accountant’s best friend was his 10-key. In order to get the $6/hr clerical job I needed to add a page of telephone numbers from a random page in the phone book with 100% accuracy. I would go through 2 add rolls in an 8 hour shift.
* There was so much more paper consumed in the pre-QB days. Today I’m virtually paperless and have empty file cabinets. Back then we had over 500 banker boxes with old records covering 8 years.
* Technology was expensive back then. My typewriter cost $500 and when it broke we’d call in a repairman. The fax machine was $1200 and the copier was leased at $300/month. Those were big bucks back then for a small biz.
* When we converted to accounting software it was expensive. We used Realworld (eventually bought out by Great Plains) since we had literally 1000s of parts but it cost $15,000 to purchase, install and train. Two PCs connected to a central server was another $7,000. Monitors were green and black and there was no mouse attached. We did have a nice dot-matrix printer (we didn’t get a laser printer until 2000).
Today I can’t imagine going back to the old way. I print an invoice in QB in less than a minute and all the posting is done behind the scenes. Need an aging? Two clicks of the mouse and it’s done. But I still love my 10-key and my clients are still dazzled when they give me a pile of untotaled receipts and my fingers fly like it’s 1993 all over again!
Dave
PS I still keep an old telephone book in my office. A few times a year when I’m really stressed I’ll add up the phone numbers for fun. Makes me feel 23 again!
Dave – I’m glad to see you’re still out here in the blog-o-spere! And I don’t think you’re old. 🙂
I still love my 10-key also. But paperless is the way to go.
I think all that’s changed from the “olden days” is the set of problems. Back then there was all the paper and the costs and cumbersome equipment. Today it’s cleaning up the books, and keeping pace with changes in technology.
Back in the day people would use these things called Dome Books, which did not require double entry. We called them Dumb books. If somebody actually followed the instructions it was pretty good, but I only saw one person who did. When Quicken first came out it was a nightmare, but Quickbooks was a huge improvement.
I had one client — note the past tense — who used Quicken for a business with hundreds of thousands of dollars of revenue and a huge amount of cost of goods sold. Needless to say, it wasn’t pretty.