Episode #023 Discrimination in the Bookkeeping Industry Part 1: Accountants vs Bookkeepers with Steven Mulligan and Kristy Fairbairn

Amy chats with two colleagues, BAS Agent Kristy Fairbairn and accountant-turned-bookkeeper Steven Mulligan, about the subtle, and not-so-subtle discrimination bookkeepers face due to misconceptions between accountants and bookkeepers.

The real message of this story is: “It’s time to evolve! Healthy partnerships between accountants and bookkeepers need to start with both parties understanding roles, responsibilities and expectations.”

Podcast Info

Episode: #023

Series: General

Host: Amy Hooke

Guest speaker: Kristy Fairbairn and Steven Mulligan

Topic: Discrimination In the Bookkeeping Industry Part 1 Accountants & Bookkeepers

Read transcript

Amy Hooke: Good morning everybody and welcome back to another episode. Thank you so much for joining me. I'm actually very excited today that I have Kristy Fairbairn and Steven Mulligan with me. So Kristy and Steven are both bookkeepers and both have been clients of mine, I would consider them to be friends of mine now. We've been in touch for… I guess I've been working with Kristy for a couple of years. And Steven and Kristy are quite good buddies as well.

Amy Hooke: So I wanted to get the two of these bookkeepers to come a long and talk with me, and talk to you guys, about… I guess, what are we even calling it? We're talking about… I guess broader, the topic is about discrimination. We're talking about bookkeeping versus accounting. We're going to share just some of our experiences going through this journey of being men and women in the bookkeeping and accounting industry. So, hi guys.

Steven Mulligan: Hi, how are you going?

Amy Hooke: Great. Great.

Kristy Fairbairn: Thanks for having us.

Amy Hooke: Yeah, no worries. So I guess we can just quickly start. Do you want to just both quickly introduce yourself, where you're from, what you do? Go from there. Whoever wants to jump in first.

Steven Mulligan: Kristy might go first.

Kristy Fairbairn: I am in Launceston Tasmania, where it's starting to get very, very cold.

Amy Hooke: Very cold. Yep.

Kristy Fairbairn: I am a bookkeeper, a registered BAS agent. I've owned my own business for coming up on two years. I've worked as a bookkeeper for probably about seven or eight years. But I've stuck in that bookkeeping industry.

Amy Hooke: Yep. And you Steven?

Steven Mulligan: I come from an accounting background. I've only had my bookkeeping business, probably, for about a year and a half now. And I've always been in public accounting and also private industry as an accountant. So coming into the bookkeeping sphere was a bit of change for me. I'm actually used to training bookkeepers. I've been doing the same sort of thing, training and accounting, for about 30-odd years. So I've seen a lot of changes within accounting and the bookkeeping space. And there are a lot of highly qualified people in both areas.

Steven Mulligan: So, like I said, running my own business actually has given me a bit more of an insight into this side of everything because there's actually more involved than a lot of people will think to do with… everyone will just say, “Oh, bookkeeping. Right, okay.” Like that. But companies rely on the day-to-day bookkeeping to run their business.

Amy Hooke: Yeah, that's right.

Steven Mulligan: And they rely on accountants as well for tax and all advisory work, but usually it's the bookkeeper who keeps everyone happy. They pay the wages, the pay the bills, they keep the cashflow moving. Everything. The life blood of a company comes from a bookkeeper.

Kristy Fairbairn: Without a good bookkeeping system, you can't have an accountant do planning.

Steven Mulligan: Nope.

Kristy Fairbairn: They can only work on the past.

Amy Hooke: Yeah, that's right.

Steven Mulligan: Sorry, we do have… there is discrimination in… between accountants and bookkeepers, which comes from the past where the bookkeeper was the wife or girlfriend that really didn't have much of an idea. So the accountant… like I've had to train lots of bookkeepers in my time. A lot of them have been hopeless. Some of them haven't. Do you know what I mean?

Steven Mulligan: But now, at the moment, I can see a whole new breed of people coming through that are probably just as qualified, and probably more qualified, than some accountants because they recognize the importance of proper data to make a decision. If you don't have proper base data, it ends… what is it? Shit goes in, shit comes out.

Amy Hooke: Yes, that's right. Garbage in, garbage out is what we say.

Steven Mulligan: That's correct.

Amy Hooke: That's fine, that's fine.

Steven Mulligan: Professional, I know.

Amy Hooke: You're allowed to swear on my podcast. That's fine. I try not to, but you never know. You never know. So Steven, you're also from Launceston.

Steven Mulligan: Yeah, sorry. Launceston, Tassie. And I'm probably about two or three kilometres away from Kristy. We've bonded, in a way, because we're in the Institute of Certified Bookkeepers. We have a meeting every month and there's a core group of us who get together and… yeah.

Kristy Fairbairn: It's a really great opportunity to network and catch up. It can be very lonely as remote bookkeepers, so it's great to have that chance to catch up and share.

Amy Hooke: Yeah, because I was actually picking Steven's brain. Because I actually asked you, Steven, where… how do you and Kristy actually know each other, and I didn't actually realize that you ran the ICB meetings down in Launceston, so that's how you connected.

Kristy Fairbairn: Yes. It is.

Amy Hooke: So you two are good buddies, and you're both supporting each other in your business.

Kristy Fairbairn: Yeah.

Steven Mulligan: Yeah. I think that's-

Amy Hooke: With client meetings and that kind of thing.

Steven Mulligan: I think that's important to support each other, even though, technically, people say, “Oh you're in opposition.” There's a lot of work to go round so there's no need to have that opposition.

Kristy Fairbairn: Absolutely.

Steven Mulligan: All the competitors, like in the takeaway food industry, always set up next to each other because its actually a marketing thing. I want McDonald's, I want KFC. So everything's together, the same with the bookkeeping thing. Kristy and I bounce off each other, we ring each other, support each other through so… Do you know what I mean? So everyone gets a good client experience because we're both professionals. We like each other. Well, I hope.

Kristy Fairbairn: We do. We do go for drinks whenever we can.

Amy Hooke: That's right. And we're all in different niches, we all have different types of clients that we work with. Like Kristy's got… Do you want to share a little bit about the types of businesses that you're working with?

Kristy Fairbairn: I'm working with small businesses, quite a few in the construction industry. I love working alongside my clients, helping them get their business on track by having good bookkeeping systems in place. I'm also working with a few hospitality industry clients as well, which is exciting because that's where I started working. So many years now.

Amy Hooke: Gosh, you guys can keep the hospitality industry. That would be my least favorite. So I'm glad there's people out there that expertise in that.

Kristy Fairbairn: Cut my teeth in hospitality.

Amy Hooke: So Steven, you're more heavily into the hospitality industry, I know. Actually, the penny dropped the other day, and I realized Steven likes to travel around testing out the beer and the wine-

Steven Mulligan: Wine.

Amy Hooke: And the food and the-

Steven Mulligan: That's right.

Amy Hooke: But also the espresso martinis. So I just realized it's research.

Kristy Fairbairn: Oh, yes.

Amy Hooke: Business research.

Steven Mulligan: Because I spent five years in the hospitality industry, I was the accountant and director of a company that ran a successful restaurant. It was probably the top two in Launceston. So I learned a lot from that. I came from the woollen industry, the copy industry, and then motor vehicle industry and then into hospitality. So hospitality is what I aim my expertise at. And it's not just the bookkeeping, it's actually running hospitality because I was in charge of costing menus, staff rostering, wastage, all the things that go into-

Kristy Fairbairn: The sales systems.

Steven Mulligan: That's right. Marketing. We had people we contracted out for marketing, but we had… I had to do the overall analysis of everything to see if the client experience was how it should be. So we've had cases where things happen, and I'd have to go and bunch up to a group of doctors, for instance, who were in there for a meal, that's had a horrible experience. So they've left the remarks on the book or whatever like that. So I would have to go and sort all that sort of thing out. So it was quite an educational journey. So when I go to a client now, bookkeeping's only the part of it. I just analyze their whole business.

Amy Hooke: Yeah, its great. It's great. And every time I caught… probably 50% of the time I call you, Steven, you're out walking your puppies.

Steven Mulligan: Yes. That's right.

Amy Hooke: Out and about. He always says… I'll send a message, 50% of the time he says, “I'm just out with the dogs at the moment.” So he's always on an adventure with the pups.

Steven Mulligan: Yes. I've got two dogs, live in a semi-rural area. So we go for a walk up the bush so I can let them off, and they run around. It just keeps me physically active, I suppose, because sitting behind a computer all day is… yeah. So, no, that's good.

Amy Hooke: Yeah, that's right. And Kristy you've got your… you got a couple of kids as well.

Kristy Fairbairn: I do.

Amy Hooke: So you're working full-time?

Kristy Fairbairn: A nine year old and a six year old. So grade four and grade one. My husband works away, offshore. So for four or five weeks at a time, I'm everything. So I've got to be able to do school drop offs-

Amy Hooke: Mom, dad-

Kristy Fairbairn: Pick up, after school activities-

Amy Hooke: Business owner.

Kristy Fairbairn: Client appoints, client deadlines, BAS deadlines, reporting. All of those things in, sometimes, five and a half, six hours in a day. So-

Amy Hooke: Basically Wonder Woman.

Kristy Fairbairn: Having a bookkeeping business that I can operate from home is fantastic. Being able to have staff work with me remotely is fantastic. Whilst they live in the Launceston area, we all work from home so-

Amy Hooke: I love working from home. It's so good. Do you work from… are you in a home office too, Steven?

Steven Mulligan: Yes, I am. I've got two people working for me. Mostly we do a combination of remote and onsite, a lot of work is not done onsite, but I actually ring up people regularly and go onsite to talk to them. Going on especially… most of my clients are high maintenance and in need of help, so especially one of my hospitality clients and one of construction clients, I make appointments with them and talk to them about everything and look at what's happening because they all have issues with ATO.

Kristy Fairbairn: Your client relationships are a huge part of your business.

Steven Mulligan: Yes, that's right. Thanks for that. Yeah, so that, hopefully, will get me more work.

Amy Hooke: Yeah, yeah. That's right. It's great. So obviously, even just from this short conversation, you can see how different everybody… we all have different ways of running our business. I'm a hundred percent online with my business as well.

Steven Mulligan: Yeah. One of my clients-

Amy Hooke: Sorry, what were you saying?

Steven Mulligan: One of my clients, who are financial planners, I went onsite… usually I go onsite for the first two or three visits, then it's remote. They asked me could I do all my work onsite, just because they needed that one to one contact. We talk about the business and they… I've got them on Receipt Bank and all those automated tools and everything like that, so I can get everything done really quickly, and then we can talk about the things that they need to talk about, which ends up to be cash flow, usually is the big thing.

Amy Hooke: Yep, yep. That's right. And now I guess we can start getting into our topic a little bit, now that everybody knows you both. So I guess I was thinking about the reason that I first decided… so I approached Steven just a week ago because you… I remember when I first started working with you, and you mentioned… you'd mentioned that you were a former accountant, you were talking about the type of work that you wanted to do in your bookkeeping business.

Amy Hooke: And you made a comment to me that day about the way… the difference between the way that you were treated as an accountant versus being a bookkeeper, so I contacted you, obviously, this week to say would you come and talk about it. Then, you obviously said, “Hey, Kristy could join as well, she's got a couple things that she might like to share.” So do you want to just share a little bit about what you shared with me that day?

Steven Mulligan: Would you like… that was a conversation a while ago now, wasn't it?

Amy Hooke: It was ages ago, yeah.

Steven Mulligan: Yeah. I'm not really supposed to mention the company, but anyways, every… you go out and analyze all the stuff and train bookkeepers and everything like that, it's like a culture. So everyone sort of sticks together and there's a bit of a hierarchy, even within the accounting industry based on your own qualifications. Not only do you get an accounting bookkeeper discrimination, you'll get it within any company.

Amy Hooke: Yeah, that's right.

Steven Mulligan: So we've sent out to train things and people listen to your advice, they're coming for tax advice, you do your tax… their tax returns and off they go. So you probably only see them once a year. Although, I was actually more client focused so I was doing all the work that I'm doing now, going to see clients and trying to help with their business affairs.

Steven Mulligan: Stepping down into the bookkeeping space, where it's a bit more hands on with the client and their day-to-day things, I've actually… I've never, ever thought about the discrimination between the two until I was handling a clients affairs, and they had a new accountant who wrote and email to me that, actually, was talking down to me like a second-class citizen.

Amy Hooke: Right.

Kristy Fairbairn: That's terrible.

Steven Mulligan: He said, “Do you realize…” This that the other. All the things that are natural… all your data should be up to date, the integrity of it. “We would like the deadlines met.” And all this sort of thing, typefaces . I can't remember what else now that happened, but I thought, now I know what Kristy was talking about because they're actually talking to me like I'm dirt. Anyways.

Steven Mulligan: Naturally, responded to them with the same courteous reply that I got from them. And said, “Well, your duties are this that and the other, my duties are such and such.” This, that, and the other. But in the end, I thought, well, I'll terminate the whole situation. The client was upset, but I couldn't work in that sphere with that sort of attitude. So I've found that what Kristy's talking about, discrimination, actually is a live and kicking, and it's nothing to do with male or female either. They'll just-

Amy Hooke: Yeah. And that's what I found interesting. I thought, isn't it interesting that… so this is a male former accountant-

Steven Mulligan: Yes.

Amy Hooke: Or I guess you're still an accountant, but a male accountant working in the bookkeeping profession, experiencing being spoken down to by business-

Steven Mulligan: That's right. And no one really deserves that sort of treatment because we're all professional people, so I felt like he was talking to an amateur. I didn't want to pull rank.

Amy Hooke: I love that.

Steven Mulligan: The client's previous accountants were really nice. They were Chinese, they were in Melbourne, very nice. We did video conferencing and we worked together. But my client decided to move with this other company who, actually, their end goal was to take the bookkeeping space as well because they don't believe… didn't believe that a bookkeeping company could give them the quality of data that they needed. They wanted to have the whole thing in-house.

Amy Hooke: Yeah, okay. So, sorry, just to clarify, so was it the business owner or the accountant that spoke to you like that?

Steven Mulligan: The accountant.

Amy Hooke: Oh, the accountant. The client's accountant.

Steven Mulligan: Not… yeah, the client's accountant.

Amy Hooke: Not the client. Yeah, got you. So just to contrast what you're saying, as an accountant how did people speak to you? What was the difference between how people spoke to you?

Steven Mulligan: Actually, they spoke to us really well because they were looking for guidance. They recognized our qualification and experience. And-

Kristy Fairbairn: Automatically the trusted advisor when you've got that label of accountant.

Steven Mulligan: That's right.

Kristy Fairbairn: I think the way some clients have spoken to you as their bookkeeper, I would be surprised if they'd spoken to you like that when you were an accountant.

Steven Mulligan: They wouldn't have done because when you're working for the accounting firm, it's assumed that you have… Well, I trained for eight years. Eight years to get my accreditation. I… because there's the chartered accountants, CPA accountants, there's five different levels of accountants. So there is discrimination within that sphere, but that doesn't matter to the client. They're getting the experience, they come in for tax advice, so you're trusted immediately.

Steven Mulligan: In the bookkeeping space, it seems to be different. The clients that I've come across are quite nice. And I… because I network with a lot of accountants because that's where I've come from. I've also noticed, since I've left that industry, the door has closed. So it's not as… I can't access the people, or it's hard to get the work that I thought that I'd get. Do you know what I mean?

Kristy Fairbairn: And the work that you were promised when you were still technically an accountant. As you were changing fields, as in, “Yes, we'll send you lots of work. Yes. Yes. It'll be lovely.” And now-

Steven Mulligan: I network with about five different accounting firms who are… everything's okay. They're all nice, but I've had to fight my own way to get the work that I had, which has actually shocked me in a way because I thought, oh, well, you know… one of my mates in one of the accounting firms said, “Bookkeeping doesn't bring much money, so we're not really interested in it.” Because they were on probably triple the rate, so they'd rather do the high-end work: the ANZ bank, and all that sort of thing. So I thought, right, I'd get a lot of work off them, but no.

Kristy Fairbairn: I found some accountants have made references to my clients about how much they're paying in bookkeeping fees, and almost had a bit of a go about how high the bookkeeping fees are and, what are you getting for that? When, if you've got a client who has a high volume of work and you're working on their file every week, then they can spend thousands of dollars a year with you.

Amy Hooke: Oh, that's right. Some of my clients are beyond 25,000 a year.

Kristy Fairbairn: Yeah, so it's not about how much they spend on bookkeeping fees, it's if they're getting value for money. If they're getting a good file, if they're cashflow, they're able to manage it better, if they're managing their payables and receivables when the accountant comes to do the end of year work, and the planning, is it there ready to go? Yes, then… you know.

Amy Hooke: Yeah, so you've had some experiences-

Kristy Fairbairn: Yes.

Amy Hooke: You've had some experiences with accountants-

Kristy Fairbairn: A particular little friend out there, yes, who is very derogatory towards me in conversations with my clients. He's tried to call me out on several things, he's tried to set me up to fail on a couple of things. Thankfully I have a great relationship with my client. Like, Steven, I do like to speak with my clients on a regular basis, even though I don't see them very often, we're often talking. And I… Steven was of great counsel to me for a little while there with…

Kristy Fairbairn: I was prepared to walk away from a client with multiple entities because could not get a working relationship with their accountant. And it was costing me giving the best service to my client. I couldn't get alignment journals, I just couldn't get simple responses so that we could work together for our client. He wanted to be the senior person there. He just wanted me to do the grunt work, and it was really challenging. So I now speak to another accountant for advice when I need to, and I just don't speak to my client's accountant unless I have to.

Amy Hooke: Yeah, it makes it really difficult because I often think to myself… I really had a bug bear for a number of years because my background is from an accounting firm, and so I started out in the accounting firm doing tax, preparing financial statements, and mostly for companies and trusts. Then, what happened from there is, my employer started a bookkeeping practice within the accounting firm, although a separate business name, and so he said to me, “Why don't you do a bit of bookkeeping.” Because I wanted to go and finish… I wanted to do my business degree. So he offered it to me as solution for flexibility at the time.

Amy Hooke: I ended up running that bookkeeping company, but was still… we're all still in the same building and that kind of thing. So I've seen… even from within the bookkeeping… and I never even thought about it until years and years later until after I'd left, but even the perception within the accounting firm, people used to make… they sort of made fun of the bookkeeping side of things a little bit. They'd always make little jokes about, Oh, you're working for this company and that kind of thing, even though… so it's sort of the same thing.

Amy Hooke: Also, the accounting firm staff, they were always paid… they were employees, they were always paid on time, whereas the bookkeeping team, our wage… because we weren't on wages, we were contractors, even though we were there as much as the employees, but we were never paid on time. So I remember every week having to contact my boss. And I'd worked with him since I was 19 years old. I had to contact him every week and say, “My wages haven't gone in this week.”

Steven Mulligan: That's not good.

Amy Hooke: And I just remember-

Kristy Fairbairn: That's a lack of respect.

Amy Hooke: Yeah, that's right. So when I left… when I finally left, I was there… I worked with that accountant for 12 years on and off, there was a few breaks in between. So I left very offended with accountants at the time. I guess it's easy to have that experience, so I came into my work as starting to run the bookkeeping business, and I'd really felt wounded by… I put all accountants under the one umbrella even though I'd never had… I hadn't really had too many other experiences. Although one I started to get into running the bookkeeping business, I started to see all sorts of different things.

Amy Hooke: So I think, for me, it started of working in the accounting… I always wanted… I used to look up at the EY building on my way to work and think, oh, one day I'll work at Ernst and Young. That's what I wanted to do. I wanted to become a chartered accountant and work at one of the big four. That was my goal. And all these years later, I look back and I sort of think to myself, I'm really glad that I didn't actually end up on that path, but I remember having a bit of a… I did have a wrestle in my own identity because I'd been trained as an accountant, although I wasn't a chartered accountant or a CPA, but I'd been trained…

Amy Hooke: Basically, the graduates that used to come in from uni in the accounting firm, I used to train them, even though I didn't have this… even though I didn't even have my-

Kristy Fairbairn: Official qualification.

Amy Hooke: Yep. So I was trained in that. And then for me coming into the bookkeeping business, to be able to say… I always told people I was an accountant for years and years and years, even after I'd been then a bookkeeper for years. I found it difficult to start to admit that I was a bookkeeper and then embrace that I'm a bookkeeper.

Amy Hooke: Then I went really to the other side, and it was sort of like… I had that bee in my bonnet about accountants. And I think now, I've come to realize that there are some great accountants out there, and there are accountants who are… they understand that it's not in their best interests to try and in-house bookkeeping and try and do everything and allow bookkeepers to get on with their job. But there's been a lot of experiences now that kind of make me think, whoa.

Amy Hooke: But at the same time, I want to see good bookkeepers have productive relationships with good accountants. And then so I guess everyone else can go… they can go have their arguments and things like that, but I… I guess just hearing-

Kristy Fairbairn: Having that-

Amy Hooke: Yeah, hearing Steven's story, and then hearing that you'd also had some struggles in this area, and then also I'd listen… I'd heard a couple of podcasts in our industry of… just I felt some accountants really ripped shreds off bookkeepers, and I was a bit shocked actually. I'd never heard accountants talking about bookkeepers before, and when I heard that it was like, whoa.

Steven Mulligan: Those accountants are pretty insecure with themselves because I work… still work with a lot of accountants that I network with and they admit it, well, they've actually rung me up and said, “The clients going to leave us because of such and such.” So they've sent me in there and I've actually saved their bacon because I've taken on the bookkeeping and they go, “If you recommend another tax accountant, we'll go wherever you recommend.” Because I've got three or four that I delegate work to, and I said, “No, no. We'll stick with them because… ” I've had a good relationship with the accountant, with the client and myself and it's all worked out really well.

Amy Hooke: Sometimes just needs that buffer in between.

Steven Mulligan: That's right. And because I think, also, I've had industry experience. I've enjoyed my time in the big four, but I've always been in and out of industries, so I've actually touched base with everyday people. It makes you more grounded so you're out of… you're not stuck in an ivory tower. It's a bit like a politician, I suppose, is the general analogy. If you really stepped out of the everyday thing and saw how people have got to try and survive and had more of an idea of what needs to be done-

Kristy Fairbairn: I think your background in training as well, helps alleviate that accountant speak that sometimes clients are put off by, that you can communicate so effectively with the client on a level that is easy to understand. You've run through systems with me as well and tried to break down some challenging things, which has been a huge help because you can communicate it that way.

Amy Hooke: Yeah, well that's all right-

Steven Mulligan: I think the industry has a long way to go. The discrimination still happens because, generally speaking, a lot of the bookkeepers aren't really well qualified. I think they actually… it's been good since the Tax Agent Act of 2009, BAS agents, about CPE hours and all that sort of thing. It's making sure people do incredible work. But I know I've seen some bookkeepers recently, they're still doing some horrible stuff, and they're not doing the training, and I don't know how they're getting through.

Steven Mulligan: And actually, it's quite annoying because I've come into this space, with Kristy's help, I've tried to run a good business, have all my insurances, all the… sit all the exams and do whatever to make my business valid, as far as everyone's concerned, and then you're competing against someone down the road who's going to charge half the rate per hour. Yes, because he hasn't event got PI insurance, or he hasn't sat the exams, or he doesn't use certain software. So it's actually quite annoying in some respect.

Amy Hooke: Yeah, that's right. It is annoying. Obviously, I've overheard some accountants talking about bookkeepers, talking about the bookkeeping profession. I don't know, Kristy, if you had a chance to listen to both the ones that I sent, but one of the things that stood out to me was a part of a conversation that went on that said… they were talking about Receipt Bank. How Receipt Bank had launched, what they were calling, a pre-accounting service, which was to… basically to remove that sorting out of the receipts and entering data.

Amy Hooke: I was actually laughing when I was listening to it because they were saying… They said, “Oh, yeah, good one Receipt Bank. You guys have come up with this clever name for what you do. You've called it pre-accounting.” And then they all started laughing, they're going “Ha, ha, ha. That's bookkeeping.” And I thought, oh my gosh! Do you guys even know what bookkeepers do? It made me laugh, I thought, oh my gosh. Bookkeepers don't sort out receipts and summarize… like I thought-

Kristy Fairbairn: Code it all to general.

Amy Hooke: Code. Yeah, like code… yeah, so I thought, I can't even remember the last time I sorted out receipts, that's just… I think what's happened is the bookkeeping profession has evolved a great deal, and I think from looking at statistics, you can see… I think the statistics that I read on Accountant's Daily was that, I think it was around 65% of accountants are in the cloud, whereas bookkeepers are more like 95%. So bookkeeping, I'm not saying bookkeepers are more advanced than accountants, but bookkeepers have evolved through the use of cloud technology. We've been able to move away from what these people-

Kristy Fairbairn: Shoebox filing system.

Amy Hooke: Shoebox filing systems. That is not the role of a bookkeeper anymore. So I know… I don't know, Steven you did them-

Kristy Fairbairn: And alphabetized receipts.

Amy Hooke: I can't remember when I ever did that. For years-

Kristy Fairbairn: Oh, I did.

Amy Hooke: I was thinking, oh, bookkeepers, I thought, these guys don't know… and I thought, okay they're making fun of the bookkeeping profession. And then I thought, but they don't… they're not actually making fun of bookkeepers because they don't understand what bookkeepers do, so they're talking about something completely different and obviously there's a lack of understanding there. So Steven, you've done a little bit of homework for the podcast, haven't you? About… because I guess we can now talk about, what is the difference between accounting and bookkeeping? What do bookkeepers do? What do accountants do? You know. Deal with that.

Steven Mulligan: I did googled the difference between a bookkeeper and an accountant, and it says a bookkeeper records and classifies a company's daily financial transactions, such as sales, payroll, paying the bills, et cetera. Accountants typically review financial statements prepared by a bookkeeper, since most bookkeepers do not have a four year accounting degree. That's one paragraph, and then I've just done a few other things.

Steven Mulligan: Part of the dictionary, which was that I've used Cambridge dictionary, and it basically says the same thing, but the difference between the accountant and the bookkeeper, the accountant is the one analyzing the bookkeeper's work and the accountant is the one that should be aware of all the taxation laws and changes and everything like that. Originally in England, most of the upper, middle class went into business professions, such as doctors lawyers and accountants, though. That's where that hierarchy thing, I think, stems from.

Steven Mulligan: Now I think it's changing. Even though I've googled those differences… the differences are there. The accountant does actually analyze things because that's what I used to do, but if the bookkeeping, the data, isn't any good, you won't be able to do proper financial statements. The bookkeepers are now getting more trained, so it should be a better especially for everyone all round, I should imagine.

Kristy Fairbairn: Yes, I just think it's got a few more years, perhaps, to cement itself as another profession like accounting, that bookkeeping is in the same sector. When you go to fill out a survey, can you ever find bookkeeping under professions?

Steven Mulligan: No.

Kristy Fairbairn: I can find accounting, financial services, but bookkeeping does not rate a mention.

Steven Mulligan: I think if they made everyone join an organization like ICB for instance, went to the national conference in Hobart, it was probably better run than some of the accounting ones.

Amy Hooke: You've just got your sound dropping out a little bit there, Steven.

Steven Mulligan: Oh, right. Okay. Can you hear me?

Amy Hooke: Oh, that's better. No, that's better. Yep.

Steven Mulligan: I went to a national ICB conference in Hobart Tasmania, that's our capital. The actual conference was a lot better run than some of our accounting training sessions and conferences. All the people there were qualified to some extent and had experiences, but if everyone was made to join those type of associations and sat all the exams and had all the checks and balances in store, I think the bookkeeping industry will be just as well regarded as the accounting industry.

Amy Hooke: And I think, as well… so in the US I find it happens a lot more than here, people talk a lot about accountants and bookkeepers in the same sentence, whereas over here… because in America, there… the bookkeeping and accounting industry is one. So basically, an accountant is… basically in the US, a bookkeeper is like an accountant, but they're… in the sense of how an accountant would be a financial controller for a larger company, a bookkeeper is a… sort of the same role, but for a much smaller business. So they basically have a similar role in a way, but it's more the size of the business, I think. That's how it comes across to me.

Steven Mulligan: An accountant does bookkeeping work, the difference comes at the high-end work. The high end, the bookkeepers are not usually qualified enough to do the high end work. When I'm talking about the high end work, is analyzing the balance sheet and talking to a client about what a balance sheet means versus a profit loss, and how their actual business is running. The accountant's job is that sort of thing, more so than putting the figures in and doing the actual grunt work.

Amy Hooke: Yeah, and I mean, for me, that in itself is interesting to me because I came from the accounting background, even until you said that… I never actually realized that's not what bookkeepers do because I've always done that. So for me, so part of my role when I first start out in the accounting firm was about reconciling the balance sheet, so I'm always saying to bookkeepers… not just-

Steven Mulligan: That's right. Reconciling the balance sheet's one thing, but interpreting financial statements is a different thing and actually is more of a skill that, I'd say, because three of my accountant friends, two of them have got the skills. So they can look at a set of financial statements and say, right, okay-

Amy Hooke: And make a diagnosis on the health of the business or-

Steven Mulligan: They can actually zoom straight into all the things. Where, myself, I'll probably give it a three-times over, and go, “Oh shit.” And then say, well… so it's that sort of degree of skill, I'd say, which normally bookkeepers don't get into that space of interpreting the financial data.

Amy Hooke: So what I've found, as well, is a lot of bookkeepers… so when I say… when I've said to bookkeepers in the past about, “Don't just reconcile the bank account, you need to reconcile the entire balance sheet, every single account.” They're like, “What?” They didn't even know that there was anything to be reconciled there. And so-

Steven Mulligan: That's right. You have to reconcile all the balance sheets-

Amy Hooke: And I've had accountants say, “We just say to the bookkeeper, ‘you just focus on the P and L, and we'll focus on the balance sheet'” and I always think, that doesn't make sense. And because bookkeepers… when bookkeepers do their courses, every bookkeeper has to learn double entry accounting. Every bookkeeper has to understand, is supposed to understand, where things fit. That when you enter something in the P and L and expense, there's always a transaction on the other side which is mostly going to be in the balance sheet, unless it's an adjustment to a reallocation, but there's going to be the double side of the-

Steven Mulligan: That's right. So if you reconcile the balance sheet, that says that everything is right-

Amy Hooke: Is right.

Steven Mulligan: In the right slot, not actually in the right slot in the profit loss, do you know what I mean? If you put something as a repair and maintenance, may be general expenses. Do you know what I mean? The classification of the expense might be incorrect, but the actual profit would be right because the balance sheet has been fully reconciled.

Amy Hooke: Yes, that's right. And so I've come along and I've seen… so for me, when I do a health check of a business, I can look at the balance sheet and immediately, just from looking at it for about five seconds, I can tell if the accounts are full of transactional errors or setup errors.

Steven Mulligan: That's right.

Amy Hooke: I can tell just by looking at it. I can diagnose from the balance sheet by looking at it. So what I've done is… I remember sitting in health checks with clients where I can see that the balance sheet has not been… it has not been attended to for many, many years, and then I've had conversations with the client about, “Who does your accounting?” So you've got… I've seen some of the most incredibly disturbed accounting files you could ever imagine. So many errors and these have gone through to the accountant at the end of every single year, and then accountant has just put in a journal-

Kristy Fairbairn: Historical balancing.

Amy Hooke: And I'm looking at these accounts and I'm thinking, there's no way that an accountant could have done that, fixed that, just with a journal. These are… there were so many errors in this file, it would've needed to be started again.

Kristy Fairbairn: Wow.

Steven Mulligan: A lot of bookkeepers don't…

Amy Hooke: Sorry, your microphone's not very good-

Kristy Fairbairn: Lean in.

Amy Hooke: Yeah.

Steven Mulligan: Right. A lot of account… bookkeepers have gone crook because the file hasn't been aligned by the accountant.

Amy Hooke: Right.

Steven Mulligan: Some cases, well, lots of cases, it doesn't happen because the client, for instance, doesn't need to look at the financials ever want to look at the financial, so the accountant doesn't do the alignment journal because the accountants make around might be, say, $250 an hour. So you'll have Joe Blow down the road that has an MYOB file, a Xero file, but he couldn't bother aligning because he never looks at it. So he gets the client's reports from us, the financial records, and he's happy. Then the bookkeepers come a long and goes and whinges about the alignment journal, but it's not her or his call about the alignment journal, it's does the client… is it cost-effective for him to have it aligned?

Steven Mulligan: But you have a business that's a serious business, so it's small to medium, and they need the services of a professional bookkeeper and a professional accountant, the filing should be aligned because I came across that last week when I said to the client, “Your file is just horrible.” “I know, we just take it in. The accountant charges $5000 and they do this, that and the other.” And I go, “I bet you they charge you $5000.” It made my job hard because I looked at and I said, “You're so heavily in debt, it's a wonder your businesses operate.” “Oh, shit we paid it off years ago. We paid that off years ago.”

Steven Mulligan: So I couldn't tell anything. I couldn't give any advice to them. So now I'm going through the process of getting it all aligned, everything's there, and talking to them because they also found that, and I've been guilty of it, the accountant talks the accountant lingo. So he says, “You haven't got enough equity in the business.” And then the client glazes all over and they talk about the accounts payable, the accounts receivable, so the client doesn't say, “I don't really understand what you're talking about.”

Steven Mulligan: So I come along and then I say, “This is what your balance sheet is saying. You owe this much money to these people. You owe that. You've got debts on your cars and everything.” So I can give them the actual day-to-day analysis of their financials in a simplified language.

Kristy Fairbairn: I think nowadays, with software evolution, clients, more and more, should have a single ledger where if a bookkeeper and accountant can have a good working relationship, then they can have that client's file aligned.

Steven Mulligan: You're right. Yeah, sorry, you're right. And I came across a good accounting company last week, and they actually work in the clients Xero file. So they don't use XPA or whatever, the accountant's software, and then have to do an alignment journal. Because I said to them, “Is everything aligned?” They said, “Yes, we've actually worked in Xero.” So you're right, it makes a difference.

Amy Hooke: Yep.

Kristy Fairbairn: Yeah.

Amy Hooke: Yeah, that's right, and I guess on your comment about interpreting the balance sheet versus reconciling it. So I guess some of the files that I… I remember asking these clients, “Who does your tax at the end of the year?” And they say, “I've got this accountant.” I said, “has your accountant ever informed you that the bookkeeping is such a mess?” And then I had one guy say to me, he said, “The accountant appointed the bookkeeper.” And I guess for me, I just think to myself, if an accountant… I think accountants are in that position where they are seeing the end result and I think… I would've thought it's the accountant's responsibility. Rather than just covering things up with journals, to actually say, “There's something wrong with the bookkeeping.”

Amy Hooke: This guy had had the bookkeeper working there for about five years. And I think what had been happening is the person's using Xero, so they just click okay. They just click the okay button, they never check to see where the transaction was meant to be going. And I remember looking at the balance sheet, and I thought… obviously I talked about… I feel that I've got an ability to spot an error. Well, this one, anyone should've been able to spot this error because there was negative account balances in both the assets and the liabilities. And I said to the client, “Is this an overdraft or a bank account?” And he said, “Just a regular bank account.” And I said, “Okay. Do you have any reason why it's negative $150,000.”

Amy Hooke: He's like, “Huh?” He had no idea. I just thought, I don't know… I feel that some of the clients that I've worked for over the years have… they have felt let down by their accountants. Of course they've felt let down with previous bookkeepers as well, and I don't think it's a case of whether accountants are worse or bookkeepers are worse, I think there's been poor quality work on both sides of the fence. However, I guess the reason why I tend to blame accountants more is because they are in that position-

Kristy Fairbairn: They're the last point of call.

Amy Hooke: They are in a higher position in the mind of the client, and they are the last point of call, where an accountant should be able to look at a client… if an accountant thinks they can interpret a balance sheet, surely they can look at a balance sheet – if a mere bookkeeper like me can look at a balance sheet and see that there's something wrong with the set up or something wrong interest transactions just looking at it – you would think that if an accountant is there to interpret the balance sheet, surely they should be able to tell if that balance sheet is accurate or reliable.

Kristy Fairbairn: They need to dig in.

Steven Mulligan: The client's balance sheet that you're looking at, is that… has the file been aligned or are you looking at the compliance reports that have come from the accountant? Do you know what I mean? Are you viewing the clients accounting files-

Kristy Fairbairn: Their bookkeeping software.

Steven Mulligan: Do you know what I mean? Because when we get the file, we usually look at everything, all the comparatives in the profit-loss, we go through the profit-loss, analyze the balance sheet. We'll do journal entries because you can't go back a recode source data because that'd take forever.

Amy Hooke: What!

Steven Mulligan: So-

Kristy Fairbairn: Find and recode

Amy Hooke: What's find and recode for?

Steven Mulligan: Not cost effective, you see? Now I'm talking from an MYOB point of view.

Kristy Fairbairn: Yes, if only that other software would have something similar.

Steven Mulligan: …journal entries to reclassify, the low-value pool from repairs and maintenance to put it like that.

Amy Hooke: Exactly.

Steven Mulligan: Put all those through, and do the tax return and that's it.

Amy Hooke: Yeah, but so do you-

Steven Mulligan: And that's still-

Amy Hooke: Do you think… I guess it's hard for me to say because when I was working in the accounting firm, I was working in the accounting firm doing tax returns, and I was working in the bookkeeping practice at the same time doing the bookkeeping. So for me, I could easily switch. I'd be like, okay, I can go and… if there's mistakes… there wouldn't be mistakes because I know how to check my own work, but when the work came in from someone who had a bookkeeper who was outside of out company, I can actually see enough to be able to recommend to the client that they get the bookkeeper to fix some things because it's the bookkeeper's responsibility…

Amy Hooke: If you're a contractor or a business owner, and you make mistakes… I mean, for me as a bookkeeper, if I make mistakes in my clients file, I'm not going to charge them to fix my own mistakes. That's ridiculous. So most bookkeepers that have any integrity would be willing to fix those mistakes. I think what happens with bookkeepers is we think, if the accountant was so… and I'm not talking about control accounts and making end of year adjustments, I'm talking about actual errors. Major errors.

Steven Mulligan: That's right. We used to do recommendation that the bookkeeper fix things, but like I said, we had to do journal entries to get the job done because sometimes the jobs been so badly put together that you analyze everything, do all the reclassification by journal entry because it's actually pointless going back and doing the source recoding.

Kristy Fairbairn: I think, if the client's going to continue with a bookkeeper who is making entry errors, or not in line with where the accountant wants it, it's important to have that relationship where they can say, “I would rather you did these things that's way. Can you go back and update it?” And then, that is where the bookkeeper takes-

Amy Hooke: That's where I was getting at. I think it's hard for a bookkeeper to suddenly realize that after years… because bookkeepers don't know what accountants say about them behind their back. The reason we don't know that is because no one's ever said it to our face, whereas I heard these accountants, they made a whole list of complaints about things that bookkeepers do wrong and I think, well, where's the communications?

Kristy Fairbairn: Yeah.

Amy Hooke: Have you ever made those bookkeepers aware… I'm not saying in a way that… We've all experienced an accountant speak down to us to say that there are errors, but an accountant who's willing to be humble enough to realize that the bookkeeper might not have done it on purpose, and they also might not have done it because they're an idiot. Do you know what I mean? There's an automatic assumption like, oh, that bookkeeper, bit of an idiot, doesn't know what they're doing, whereas they don't know the whole story.

Amy Hooke: Maybe that bookkeeper is incompetent, but it might be a case of something they aren't aware of. And then there comes in the argument that they might go, “Well, they are a registered BAS agent, therefore they should know this, this and this.” But is that true? Are bookkeepers supposed to know everything automatically, all at once?

Kristy Fairbairn: We are amazing.

Amy Hooke: Yeah, that's right.

Kristy Fairbairn: But yeah, there are things we don't know. Accountants have their own quirks. I work, thankfully with-

Amy Hooke: Yeah, and ways of doing-

Kristy Fairbairn: A lot of great accountants and there are some of them that do things a particular way and others do it completely different way. So I have to check with new accountants, how do they like certain things-

Amy Hooke: How do they like it done.

Kristy Fairbairn: Like the low-value pool assets. Some like to track transactions under a thousand, 20 thousand, now with the 25 and 30; there's all sorts of different quirks to each accountant for each clients. And if you can't have that working relationship because there's not the mutual respect between the two parties, the client doesn't get the best.

Amy Hooke: So Steven, I've got a question, actually for you then. Because what you're talking about Kristy is an accounting firm having a… so there's one thing to have a preference on the way that you prefer the things to be done as a firm versus what's the right way or the wrong way to do it. So I think that might be… do you think that there could be somehow people… maybe somehow people fall into error, thinking that, because something is done differently, that it means it's done wrong. To me, that's just a lack of communication, where if it's a bookkeeper who's incompetent, doesn't actually know what they're doing, that a whole different issue.

Steven Mulligan: A lot of it's that lack of communication. So the client comes into me and, working in an accounting firm-

Amy Hooke: Can you just watch your microphone a bit. It's really… it fades in and out.

Steven Mulligan: Does it? Can you hear me now?

Amy Hooke: That's better.

Kristy Fairbairn: Yes.

Steven Mulligan: If the client comes into an accounting firm and brings in their financial file or whatever – their Xero file or MYOB file that's in the cloud or whatever – and you look at it, sometimes it's the clients call when you told them whether they want to engage the bookkeeper in the whole experience as well because there's been mistakes and you'll tell the client. And he many or may not want the bookkeeper involved in our conversation.

Steven Mulligan: So it's all about the degree of communication between the three parties. A good communication is with the three of them, but sometimes clients have decided, “No, no, that's it. Just get it. Do the compliance reports and the tax return and stuff and that's it.” All they want to do is just get in and get out because they just want it done and that's it.

Amy Hooke: Because they're charging too much. Because their hourly rate's so high, they're scared to stop and make… like to do a-

Steven Mulligan: They're not as dear as your hourly rate.

Amy Hooke: Na, I'm just kidding.

Kristy Fairbairn: I do think, if you're going to hire professional people to do professional work, then it should be professional. If someone's going to the effort of hiring a bookkeeper to do the bookkeeping work and hire a good accountant-

Steven Mulligan: That's right.

Kristy Fairbairn: End of year and planning work, then if you want it all to be working-

Steven Mulligan: That's true. But like I said, some of it… some clients will get the bookkeeper to do the day-to-day work and pay the wages, pay the bills-

Kristy Fairbairn: They just want it done.

Steven Mulligan: Then when they come to us, to the accountant, they'll just think we're a nuisance anyway. They just want to come to see us to get their tax returns done and get out. So they're not really worried about connecting the bookkeeping, the accountant, whatever else. So do see what I mean?

Amy Hooke: Yeah, you're all just a bunch of number crunchers anyway. Just crunch my numbers-

Kristy Fairbairn: Don't need to promote his business.

Amy Hooke: Keep the bill down. I won't get emotionally involved with you guys.

Steven Mulligan: That's right. It's all compliance, it's not value added because a lot to… they'll go in and say, “Yes, I want my tax return done. Do this, that and the other.” And that's it. Some other ones want to know what's wrong with their business: how do I increase the turnover, why haven't I got cash flow, all that sort of thing. Then I'll have to have the talk and say, “Well, we need to look at your whole system. So that includes the bookkeeper. So we have to streamline her or his process make sure everything's right.” And we talk the same language.

Kristy Fairbairn: I guess that's the thing too. When clients know what it can be like having a good bookkeeper, they just don't know how life ever existed beforehand. I've got a client now who, he cannot thank me enough, he's so lovely. And his business is thriving, he's expanded from one crew to three. He had an accountant working as a bookkeeper on maternity leave doing his bookkeeping previously.

Kristy Fairbairn: He nearly lost his business because the bookkeeping work was so slow and so basic. His cashflow was appalling. Having a change of bookkeeping systems and having best practice work done, he's thriving. So bookkeeping can be just bookkeeping, it can be very basic simple stuff to get you through for BAS and tax time, or it can be working alongside business owners to-

Amy Hooke: A lot of… look, and I don't really know… I guess I'm not really heavily involved in the accountant industry, but in… I am heavily involved in the bookkeeping industry, but I know a lot of… I know from my own experience and a lot… a lot of bookkeepers… a lot of business owners consider their bookkeeper to be almost like a friend.

Amy Hooke: As in… and I did hear the accountant talking on that podcast about how… or maybe it was one of their other episodes, but about, they said, because accountants are the trusted advisor, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah. At the same time I thought, I've never heard a business owner say my accountant is my friend. Everyone says, “Why is my accountant charging me so much?”

Kristy Fairbairn: That's our-

Amy Hooke: Whereas the bookkeeper, because we are so involved… and I always say to bookkeepers, not everybody has the business owners personal mobile number. Not everybody has… can just walk straight into the business owner's office, basically without knocking. Do you know what I mean? So bookkeepers are in a position where, on a daily basis, they have very intimate access to a business owner. In fact, bookkeepers… business owners share things with the bookkeeper that they would not tell their spouse. As in, especially the struggles that they have within the business and in terms of… book keepers might not know the accounting lingo to be able to-

Steven Mulligan: They don't have to. The bookkeeper really is there to guide the person in running their business.

Amy Hooke: That's right.

Steven Mulligan: Everything about running because, like I said, I've been in and out of the accounting space and I've also always had part-time jobs while I've been working at an accounting practice. And that's been in business itself, helping them run it. So not only am I paying the payroll and paying the bills, I'm actually saying to them, “We need to do this, we need to look at marketing, we need to get rid of those employees and get more efficient employees.” All those sort of things.

Steven Mulligan: Bookkeepers actually get involved with that. But you ask a lot of people, businesses will regard the accountant, mostly, as just doing their tax once a year, charging them five or six thousand dollars or whatever and then, goodbye, I'll see you in 12 months. So that doesn't help them run a business. So they wouldn't be intimate with the business owner. So we all have our own part of the market, don't we?

Amy Hooke: Yeah, that's right.

Steven Mulligan: I've also come across some businesses lately that think their accountant is the bees knees-

Amy Hooke: Bees knees, yeah.

Steven Mulligan: They'll pay them $10,000 to do the whole stuff and they go backwards and forwards like anything. A client that I just got recently who's in the construction industry is in one of the big four, being sent to me because I'm out of the big four. But he said, “My service is so good,” he said, “I don't want to pay them hardly anything. They can do my tax once a year. I want you to take control of my whole business and all the bookkeeping because you can understand what we talk about.” We can sit down have a beer, we look at everything to do with his business, we do the bookkeeping, we talk about all of the other stuff in running a business. But he's really happy.

Amy Hooke: Well, that's right. And I guess, look, with my clients, as I was saying before, if I got… if I had a chartered accountant or a CPA sit down and drill me about accounting lingo, I wouldn't be able to answer their questions in accounting lingo, but the way that I relate to my clients, the way they see me is, they don't see me as a bookkeeper, they see me as a business owner. They see me as… and I've had a number of clients say this, they say, “You're not a bookkeeper, you're a business owner.”-

Steven Mulligan: And a business-

Amy Hooke: I don't just know how to interpret my client's financial statements, I know how to interpret my own financial statements. Do you know what I mean? For me-

Kristy Fairbairn: Understanding that next level.

Amy Hooke: That's right, exactly. So I can sit down with my clients like, okay… I have heard accountants say that the bookkeepers shouldn't… they shouldn't be interpreting the financial statements or giving advice, but… So I know how to sit down with a client and look at industry benchmarks, I know how to create a three or five-year forecast. I know how to do budgets. I know how to do model… financial modeling, different scenarios and things like that. I know how to have a conversation with a client about-

Steven Mulligan: -your skill base because you're a very skilled-

Amy Hooke: No, well that's right. That's right.

Steven Mulligan: Yeah, that… Does as well because I've seen the reaction, she knows her stuff and with a little bit more help from me-

Amy Hooke: Hey, hey, hey are you talking about me? If you're talking me up make sure your microphone's working. Say it again, say it again, but-

Kristy Fairbairn: Who were you talking about then Steven?

Steven Mulligan: I was talking about Amy being very skilled and about Kristy being at the top of her trade as well, so-

Amy Hooke: Oh, I love it.

Kristy Fairbairn: Well, I have been coming up under a wonderful mentor for the last year, so…

Amy Hooke: Oh, thanks guys. It's so funny, I called Steven a couple of weeks ago, and he said, “Well, if it isn't the savvy bookkeeper herself.” And I just thought, that's so funny.

Steven Mulligan: Thinking that you do all the work yourself, and you've got a whole team of people behind you.

Amy Hooke: Yeah, yeah, that's right. That's when you found out that I've got a team. I'm not actually Wonder Woman, I just have staff.

Steven Mulligan: The thing is, you are very skilled. Both of you have background in lots of things, industry background and bookkeeping-

Amy Hooke: Well, that right. I started out as a boot-scooting waitress at Lone Star restaurant so-

Steven Mulligan: It's life experience that gives you the personality that actually attracts people. You talk about value-adding to do with bookkeeping, but that's a side issue. If you've got your bookkeeping, but you've also got the industry and the experience and the personality, that really gives the client a feeling of confidence and that's what they want. And they-

Kristy Fairbairn: You want them to feel they can be lifelong clients and friends.

Steven Mulligan: They're not worried about accounting lingo because most of the accounting lingo turns people off…

Amy Hooke: It put them off.

Kristy Fairbairn: Very fortunate.

Steven Mulligan: Right.

Amy Hooke: So okay, so I have question then, so obviously, we've talked about what a bookkeeper does, what an accountant does, and obviously the lines fall in different places for different people. Because I guess the question that came to my mind is: is bookkeeping accounting?

Kristy Fairbairn: I think it's potentially classed as part of it, that it's certainly a step of it or a layer of accounting.

Amy Hooke: Yes, yes. That's right.

Steven Mulligan: For me it's three quarters of it. Three quarters of it is bookkeeping. It's the last bit that is the accounting and advisory work. That's the-

Amy Hooke: And I wonder… I don't know how long's that been the definition. I guess that's the current definition because I mean… so I've been studying the history of accounting, I'm reading a… I've been reading a couple books about it. My business coach sent me down a rabbit hole researching how did bookkeeping first start. So the way that bookkeeping first started was people were interested to know what their financial position was and not in terms of…. because with talking about printed report. I guess were talking about a bound report that comes in an envelope and it's got all your financial statements in there.

Amy Hooke: But back in the days of… I think they found their first record, their first historical record, that someone had been interested in keeping a tally back in caves where they used rocks. They used rocks to count how many of a certain… so the rocks would represent different types of possessions that they would've had. So for example, sheep or something like that. or-

Kristy Fairbairn: Sheepskin.

Amy Hooke: Yeah, that's right. So people have been interested for a long time in working out what's their stock on hand. And what do people owe to one another; who owes me and who do I owe. From what I can see in accounting history, there was never a division between bookkeeping and accounting. In fact, a bookkeeper was an accountant, accountant was a bookkeeper and the accountant was very much responsible for recording each and every transaction.

Amy Hooke: And I actually did another podcast on this, I can't remember which one it was, I think it was the one about P.I.T.A clients maybe. So basically what would happen is the… so we talk about… I don't know… I don't know about you guys, but have you ever had a dream of real-time accounts? Because I always think to myself, we've been promising our clients real time accounts back since the nineties or whatever and it's… we're getting closer, the gaps getting smaller because of the technology, but we're still at least 24 hours behind plus getting data from the clients and things like that.

Amy Hooke: The gap is getting closer. Whereas back hundred of years ago, let's say, I think it was around the 1300s period of time that I was talking about, they had real-time accounts. So the accountant's role was to literally sit there and wait for a transaction to be made and then record it and then… and the point of it was so that at any one time, the business owner or the bank or whatever it was, could come to that person and say “What is my financial position?” So at any one time, they could then come to the accountant and the accountant would say, “This is how much you owe. And this is how much is owed to you. And this is from whom and to whom. And this is the value of your assets.”

Amy Hooke: And, also, they kept a… So these are the accountants that had to be really clever, they kept a double set of accounts; one for tax reporting, and one for the business owner to know how they were actually doing, which sounds a little bit like how things are down today. But I always thought, that's so interesting. And so the bookkeeper… so they were called… Well, I think… I don't know if they were called bookkeepers, but I think in some of what I've read they read, they refer to these people as bookkeepers. They were considered like nobility. They were considered to be-

Kristy Fairbairn: They were the controllers of so much then.

Amy Hooke: Yeah.

Kristy Fairbairn: Really in charge of the economy, and the growth of their area-

Amy Hooke: Yeah, and so I found that fascinating. So in that first podcast where I talked about that I'm like, “Come on guys. Real time accounts.” They were doing it all those years ago without computers, they just had their little quill pen and their ink and their ledger book. I just think that's fascinating they had real-time accounts. But imagine how expensive it would be if we did that today?

Kristy Fairbairn: Crazy.

Amy Hooke: So there you go.

Kristy Fairbairn: Cyclical.

Amy Hooke: Well, that's right. Maybe we'll get back to that, I don't know. But I always think to myself, why do we want real-time accounts? Because we want everything to be up to date. Why do we want everything up to date? What are we going to do when the accounts are up to date? By the time they get up to date, we're already past… the month's already gone, it's like, oh, well.

Steven Mulligan: Most of my clients don't want up to date.

Amy Hooke: What was that, sorry?

Kristy Fairbairn: That's the-

Steven Mulligan: Some of my clients don't even care about up to date. Do you know what I mean?

Amy Hooke: Yeah.

Steven Mulligan: You want it up to date, but they don't really care. As long as their business is running and they've got their BAS-

Amy Hooke: As long as there's cash in the bank. That's what those people say.

Kristy Fairbairn: The best way to know if there's cash in the bank, and when cash is coming to the bank and when it's coming out, is by having real time accounts. So whilst it might not be directly important to the client, if they didn't have the services that we can give them, they would be lost. They just don't understand the importance, which sometimes they don't have to. That is up to their bookkeeper and advisor to know this stuff for them, but it makes a huge difference to the viability of their business.

Steven Mulligan: Yes, right.

Amy Hooke: That's right. And I think, really… in my opinion the struggle enters in when there's overlap between the skills of the accountant and the bookkeeper, maybe the accountant feels, or the bookkeeper feels that they're coming in on their territory. For example, maybe the accountant, historically, did the persons BAS lodgement and now they hire a bookkeeper who's registered and, all of a sudden, there's that conflict.

Amy Hooke: I think we need wisdom in every situation where every accountant relationship is going to be different. We can't blanket and say, “Well, with every accountant this is how I'm going to operate.” It's really about exploring that individual relationship with that accountant and finding out where… because I guess the two problems can arise if there's… if the boundary falls where there's a crossover in skills, or if the boundary falls where there's a gap in skills. That's where the two frustrations are really coming from for people, isn't it?

Kristy Fairbairn: Yeah, and it's just not effective communication when you're not able to have dialogue with the other person on the other side of it, it's very hard to get it right.

Amy Hooke: If they're not willing.

Kristy Fairbairn: It's the same as when you're only communicating in written form. If you're texting and emailing, whatever it is, you can't get the tone from it. So whilst the person on the other side might just be really quickly firing off a quick email, it could come across really abrupt or curt and actually, if you talk to them, it'd be fine. It'd be lovely and free-flowing and easy. So there's that balancing act of how you choose to communicate and build your relationships.

Amy Hooke: Yeah, yeah. Exactly. And we were talking about the chef versus cook analogy earlier because we… Steven, you mentioned that there's a couple of different types of discrimination that would be applicable in our industry, which is gender discrimination and qualification discrimination and then just general discrimination, waste discrimination, any other kind of discrimination that you can-

Steven Mulligan: Well, that's right. Within the accounting circle, if you're not a CPA or you're not a CA, you're not anything. So there's that discrimination. And in the bookkeeping thing to do with BAS agent and bookkeepers, that could be valid as well because if you're not a BAS agent, you really are limited by the services you could offer. So like I said, there is a qualification discrimination. And some people are just plain horrible anyway, so they'll discriminate about anything whether it be gender or whatever because we're all just people and got a job to do. So you just get people that are just nasty. That's all.

Amy Hooke: I definitely agree and we've seen that in the bookkeeping industry. Yes, bookkeepers need to be registered BAS agents to do certain things, but I think the way in which we speak to people is important especially because, if someone's new to the industry and they simply didn't know something, you can't be expected to know everything at once and… If you haven't been exposed to something… like I remember working in… when I was working in the bookkeeping practice and I was running that, I remember just hearing, oh, yeah, I've heard that you're meant to be registered, but because I was covered by my boss's tax agent registration, it never really… it wasn't on my radar.

Amy Hooke: I'd heard of it, but it didn't really apply to me. So when I went out on my own and started my own business, I was like, “Oh, yeah. I better look into that thing.” And then I looked at it and I was able to register straight away because I already had my hours up, so it was easy for be. But I don't know what it's like to be a bookkeeper who has to go through getting… trying to get supervised, that just hasn't been my reality, I haven't been exposed to that, but I know the bookkeepers that are in our community really… they struggle with that.

Amy Hooke: They say, “Well, how do I get supervised? How do I do the work if I have to approach a business owner as a solo business operator and then say, ‘But I have to get supervised.'” And they have to declare that they have to be supervised. It's a tricky situation. Then it brings you to that question…. I guess there's sort of a sense… maybe there's a sense of, I don't know… be some bookkeepers have a sense of entitlement. I don't really know.

Amy Hooke: Well, anyways, it's been really great to have you two along to talk about this. One of the analogies that was coming around in my mind all week leading up to this was about the kind of battle that goes on between doctors and nurses. Doctors are highly qualified; they spent many, many years in training and university to have high level of qualifications. Now, nurses are also highly trained and they also have qualifications, but they're not considered on the same level in those circles and you've also got… So you've got doctors who get offended by nurses. They think, oh, the nurse crossed the line in giving advice or something like that. But I think what happens is, in the medical profession, the valuable work that the nurses do, it is very hands on and-

Kristy Fairbairn: They spend more time with the patient.

Amy Hooke: A lot of time with-

Kristy Fairbairn: In our industry would be clients.

Amy Hooke: Yeah, we spend a lot of time with our patients.

Kristy Fairbairn: They feel like patients sometimes with the therapy we do.

Amy Hooke: Yeah, that's right. That right. Exactly. So that was really going around in my mind. But to people outside of that industry, we say, “Well, of course nurses are valuable to the profession.” I wouldn't take a nurses comment as a medical diagnosis, but a nurse can have an opinion about something. I do see that that tension exists between them and it seems like, okay, that's not great. And then also… in a way, there's a similar structure there because bookkeeping is a female dominated industry, just like nursing is. And accounting is a male dominated industry, especially in terms of who owns the businesses, not necessarily the number of accountants. I guess we could talk about that another day, but I do feel that there is a battle of the sexes that goes on between doctors and nurses, and bookkeepers and accountants.

Steven Mulligan: That's right. That's really it. But that's for another conversation.

Amy Hooke: That's another conversation, exactly but we won't start that one now because I… that's right!

Kristy Fairbairn: We could have so many conversations.

Amy Hooke: Thank you two for joining me today.

Kristy Fairbairn: Thanks so much for having us a long Amy.

Amy Hooke: And thank you everyone for listening. I'll see you again next week. Have a lovely day.