How to use the services of a Tax Consultant.

By Patrick M. Omony

Engaging a tax consultant for his services can be a daunting and nerve-racking experience, filled with intrigue for both the client and the Tax consultant. The client on one side, wants to get the best service and at the right cost, while the Tax consultant wants to be equitably compensated for his service.

I would like through this article, to clarify a few things that should enable the client and Tax consultant have a good interactive experience.

It is suffice to say, that Tax is an integral part of life, which a consultant can help a client to deal with or develop innovative strategies to address the complexities in it.

Tax professionals recognize, on one hand the fact that most taxpayers are not familiar with the intricate of tax laws, and therefore need to be assisted in complying. They guide taxpayers on how to comply with their tax obligations which may be complicated for an ordinary business person.

What Does a Tax consultant do?

A tax consultant offers the service of preparation and filing of tax returns or other documentation required by the Uganda Revenue Authority or relating to a right or obligation in the tax laws for a client including request for opinions, rulings, refunds, reviews, settlement arrangements and making objections as well as offering advisory service of the same.

They help tax payers tackle tax assessments with the aim of eliminating or obtaining a fair position for the taxpayer. Tax consultants proceed to engage the Tax man after understanding the position of the client and that of the tax Authority. Tax payers have often had their objections and appeals rejected and assessment upheld for failure to present substantial or lawful defense to simple tax assessments. A tax consultant generates defense points of reasoning after reviewing a client’s actions that have resulted into an assessment, and combs through tax laws, URA’s publications and rulings to raise valid points to support the reasons to successfully object to an assessment or appeal.

Caution on choice of consultant

Many incidences have been reported, of poor work by qualified tax consultants, where a consultant mishandled a client’s tax matter leading him/her(client) into serious tax debt or in some cases caused them to miss tax credit opportunities and waivers that they were due for. Tax incentive opportunities give businesses, mileage in much needed cash-flow, through tax-refund, exemptions or offsets. It is vitally important to note at this point, that matching a consultant with your tax needs is crucial.

These are some of the red flags that should help a client identifying the right consultant. Any consultant that promises a drastic reduction of a customer's taxes without first getting a detailed case background is likely going to end up being a scam. A consultant who will not inquire of a customer the nature of his/her business and why he or she owes the tax authority money is not conducting the full due diligence process that would be required for developing a proper engagement strategy against the Tax Authorities on a tax matter.

Tax Consultants have often branded themselves by specializing in industries such as filming, manufacturing, agriculture, real-estate, retail etc… or certain undertaking such as acquisitions, mergers, Asset transfer and disposals while others specialize in small businesses like SMEs and personal tax. They are respectively more cut out to offer Tax compliancy and advisory services in those areas. A tax consultant who is familiar with the tax payer’s industry or business and all its intricate transactions would offer better service. It is therefore incumbent upon the client to, before hire, interview a prospective Tax consultant with the aim of establishing what he/she knows about his industry and business. Tax consultants and firms in an effort to offer better service, teamed up with business development experts who are able to weigh-in in understanding the client.

How to engage

After a client has zeroed on a particular consultant, the next stage is to establish the terms of hire. A Tax consultant can be hired on an ad-hoc or a retainer contract the basis of which, the consultancy cost and fees are structured. The ad-hoc contract is when you chose to engage a consultant for a particular tax matter and that’s it. It is most recommended for one offs such as handling particular Tax assessment/Assessments, whereas the retainer contract is most preferred for long term relationship such as continuous advisory. However the most recommended for a business or organization is a hybrid contract.

A hybrid contract is where an enterprise contracts a consultant to file returns as well as offer advisory service on a ad-hoc basis. Care must be taken by the client to ensure that the consultant does not feel cheated as this will not motivate him to be committed. Clients have often been known to cleverly sneak in tax work to be done at no fees in such contracts.

To address this concern, a provision in the contract should cater for re-reimbursement of additional fees and costs to cater for such uncertainties since the course of direction, duration and intensity of engagement with Tax Authorities on a tax matter is very unpredictable.

Pricing options

Some examples of the new value based pricing concepts include basing prices on a percentage (10-20 percent) of savings achieved. A consultant may offer a fixed or total price upfront to avoid any potential surprises to the client and; so that customers can compare value to price before they agree to purchase the service. Offering several levels of service packages and different pricing options for each package and Providing a service guarantee whereby clients are eligible for total or partial reimbursement of the fees paid if they are not completely satisfied with the service can also be considered.

With this information, a client should be enlightened enough to be able to structure a win-win confortable engagement with a preferred consultant.

Engaging third parties

 For those that might not feel confident enough to strike a good contract with a consultant, can engage a business development expert at a modest fee for his time to help vet a consultant. Word of caution though, they should do the due diligence to prevent conflict of interest.

Finally when objecting to assessments, appealing or undergoing a Tax Audit, clients should be prepared for an extensive financial analysis and bureaucratic process that may stretch out for months.

The writer is a Business Development, Audit and Tax Consultant and the

C.E.O and Founder of Omony Consulting Co. Ltd

jwauditors@gmail.com

SMEs need to see more value in Audit engagements.

By Patrick M. Omony

One important service, which Small and Medium Enterprise (SMEs) have failed to utilize effectively to improve their bottom lines and increase business value to scale, is Audit service. This is echoed by Alan W. Anderson the president of ACCOUN-ability Plus in his article The Goal of the Audit where he sighted a survey conducted by KPMG of 200 small to medium-sized companies which found, that 56% of respondents saw the normal audit as a routine chore that varied little from year to year and, over 60% of the companies said their auditor did not raise any issues or ideas that were used in their business to enhance their processes or decisions.

SMEs make up close to 90% of businesses anywhere in the world economies and are responsible for providing employment to close to 90% of the people actively employed. That said, SMEs in Uganda especially continue to struggle with governance, management, manufacturing/production and growth challenges with dire consequences.

An Audit engagement process, can result into an array of opportunities to improve processes in management, corporate governance and strategy in areas such as product innovation, customer satisfaction and care, innovative management methods to sustain revenue growths through customer acquisition and retention strategies, general administrations, manufacturing/production, asset management as well as financing and investment opportunities.

Expand audit need

To realize this value, seen as solutions to the fore mentioned bottom lines, entities especially SMEs, will have to expand their Audit needs beyond the traditional Audit which centers around Assurance, fraud detection and compliancy assessments to include, aspects of advisory audit such as, reviews of, governance and various business processes, and also benchmark these, against best industry practices with a view to add value.

Value in Audit

Why traditional Audit is not helping SMEs, is because the primary concern for a small business is not assurance or fraud. These operate less complex systems, that make it easy to detected fraud and the compliancy demands for SMEs are extremely low. This therefore means, an SME’s primary interest in audit, should be to seek for opportunities to scale their businesses or enterprises by undertaking an Audit, that offers more than what, traditional Audit offers.

Since 2011, the IFAC Global SMP Survey has helped to raise awareness about the challenges and opportunities faced by SMEs globally. Its 2016 survey results, revealed an increased demand for non-assurance/related services by SMEs. Audit firms, have in response to these demands, upgraded their audit service lines so that, they can offer more value.

Whereas these innovations have been made by Audit professionals, SMEs still continue to request for the traditional Audit service as seen in the numerous tender request for Audit service.

SMEs need skills

To undertake the kind of Audit being proposed in this article, SMEs need to acquire special skills set to ensure an equivocal input. These skill shall enable them perform prior self-assessments before engaging an Auditor. This would include, identifying and risk profiling crucial business processes and suggest ways of how they want the issues to be tackled in form of a preferred audit methodology, present them in a communication to potential Auditors in terms of reference, select the best match Auditor and proactively follow through the engagement to implementation of recommendations.

Such an Audit is crucial, for an enterprise to not only survive, but also avoid stagnation.

Matching the auditor with the identified Audit needs is very critical; this is because, auditors vary in terms of experience and interest. Auditors have often branded themselves, by choosing to specialize in particular industries or business process and, are therefore more cut out to deliver the greatest value to SMEs if well matched with the enterprise’s Audit needs. An SME who has put in skillful effort to determine its audit needs, has greater chance to select an Auditor who will raise issues and ideas that can be used in their business to enhance their processes or decisions.

     Auditors are trained professionals who do not impose their will on clients. They therefore, can only go as afar into the client’s affairs as the client can allow them. SMEs should seek training that focuses on improving their technical input-capability on key areas of an audit process namely; the pre-engagement, engagement and the post audit which require its keen participation to ensure its maximum productive input.

    These trainings are short corporate courses ranging between two to three days depending on the needs assessments of participants or organization. One does not require any particular academic back ground to benefit; just the mind to want to learn how to improve things.

                                       The write is a Trainer and a Senior Audit consultant with Omony Consulting Co. Ltd

jwauditors@gmail.com

Ugandan Accountants Need to think Value

By PATRICK M. OMONY

About a month ago Accountants in practice held their annual half day practitioner’s forum organized by the Institute of Certified Public Accountants of Uganda (ICPAU).The forum is ideally an event where practicing accountants are supposed to share their experiences and challenges in the various aspects of the practice and try to address identified bottlenecks while forging a way forward on how they can grow the industry by serving the market/ clients better.

With signals from the market showing a continuous decline in growth of the Ugandan accounting industry with close to 80% of local accounting practices on survival mode, figures from Uganda Revenue Authority (URA) showing only 20% of tax agents servicing 75% percent of the 1.4 million tax payers and the high number of unemployed Certified Public Accountants (CPAs)coupled with the recent statements by the president of Uganda which a council member reechoed during the meeting in which he questioned the value of accountants; practitioners surely had quite a mouth full to discuss during the forum which unfortunately didn’t turned out not to be the case.

 The event which is on its 7^th year running has a lot to improve on in terms of methodology, quality and relevance of topics discussed.

The challenges faced by accountants in practice and employment are much more than what it appears I.C.P.A.U has capability to manage given its limited mandate which is basically to regulate the profession by, offering guidelines and ensure adherence to standards of practice and code of ethics.

Experts have placed the accounting profession as one of the top five professions whose industry is rapidly being transformed by technology. Accountants all over the world are doggedly pre occupied with searching better ways to adapt and remain relevant in practice and in employment. The race to upgrade individual skills to move away from routine tasks and accounting firms formulating strategies and testing business modules with better services to bridge the gaps is at its all-time high. These are issues that should have dominated the forum.

Practitioners appear to believe that their profitability is being undermined by quacks in the market and the solution to this was to push for more regulations. The best way would have been for the practitioners to first understand who these quacks are?, and why the market deliberately prefers their services over the legally recognized accountants. This knowledge would have guided the exchange of ideas around this issue on how to counter this by offering superior value in their services rather than opting for coercive means of greater regulations and enforcement measures as this is just ignoring the real problem and is counterproductive.

The hush business environment facing accountants in practice has seen many practitioners especially the Small and Medium Practice (SMP) tiers threatening to throw in the towel and exit the trade an action that will negatively affect the economy. The profession world over and Uganda not being an exception is under serious threat from technological advancement; which is enabling quick implementation of cost cutting management innovations seen in the growing trend by entities moving towards thinning accounting departments and employing fewer accountants. These issues should have taken center stage with mitigation measures being solicited to minimize its negative impact to the profession, Practice and others.

Gauging the discussions on the floor it was evident that practitioners did not have a good grasp of the business aspect of their practice and as thus were heading in the wrong direction in as far as how to improve the economic performance of accounting firms. This lack of clarity curtailed their ability to visualize the business dynamics of the trade. Practitioners need to appreciate that a practice is a business whose services will have to compete against substitute services as evident that more and more enterprises and organizations are spending less on services of accounting firms; reallocating the resources to engage monitoring and evaluation experts and business analysts for their annual management reviews and limiting audit services to simple checks to comply with regulations.

Untapped Opportunity for SMPs in the private sector.

There is huge untapped business potential for Small and Medium Practices (SMP) in the private sector. But to monetize this market accountants need to a turn away from making those fussy claims of service benefits and invest in; creating more real value, repackage and tailor services that suits this market. They will also need to acquire real skills on effective customer acquisition and retention for a practice based on persuasion on value and how to rump up service innovations.

They need to talk to and listen more to the market/consumers than to themselves through well structure dialogue sessions but most importantly strive to change the negative consumer mindset by crafting new and fresh massages when advertising these services through an infomercial kind of advertising. Infomercial advertising is where the consumer is educated more on how to identify and use a service/product to solve his problem. Developing this market is an uphill task so to champion this cause; they will require active leaders who know what to do and would NOT just hold positions to build CVs or engage in sterile adoration PR. Leaders who will be rated by result seen in real value addition to the industry defined as happy clients who want more service, more money in the hands of practitioners and more employment created for others NOT on perception.

They will also have to create well thought relationships with other associations for strategic synergies e.g Private sector foundation, KACITA, Uganda Manufacturers Association, Uganda Investment Authority etc.. for leverage to build the consumptive end of the trade by advancing skills such as the auditee audit enhancing skills, Management and cost accounting for non-accountants, and integrated reporting skills on sustainability issues.

Organizers should endeavor to furnish members with enough quantitative data indicating the potential value and size of the market, broken down into possible annual revenues that the different tiers of practice could ideally generate.

The future of accountants in both employment and practice is grime with the light at the end of the tunnel coming from a heavy full speed train loaded with tech and biz innovation heading towards them. Accountants cannot afford to continue burying their heads in the sand; they need to fold up their sleeves tone down on pride and academic posturing filed with over rated claims of value in their services and begin to acquire new skills, stop fearing each other but corporate and interact more to exchange information and ideas to better understand the consumer and grow their industry.

The writer is the C.E.O, Founder and Principal consultant with

OMONY CONSULTING Co. LTD

jwauditors@gmail.com

Tweeter @ p_omony