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The Importance of Mutual Understanding Between External Accountants and Owner–Managers of SMEs

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  • Stefanie De Bruyckere
  • Frederik Verplancke
  • Patricia Everaert
  • Gerrit Sarens
  • Carine Coppens

Abstract

This study investigates the perspective of the owner–manager of a small or medium‐sized enterprise (SME) on the importance of mutual understanding with an external accountant. Mutual understanding means that the owner–manager understands what the accountant is saying and feels understood by the accountant. The results, based on 310 completed surveys of Belgian owner–managers, show that owner–managers who have a high level of mutual understanding use the advice of their external accountant more extensively. This is in turn positively linked to the financial health of an SME. Furthermore, several drivers that enable the establishment of a high level of mutual understanding are explored. Owner–managers with a high level of mutual understanding consider their accountant as a strategic partner, experience a high level of proactive behaviour with them, have a higher frequency of formal contact, and perceive informal contact as important. External accountants should consider these opportunities in their client management and training of internal staff. Education of clients and openness also seem very important, as the level of a client's accounting knowledge, the number of accounting topics owner–managers deal with, and transparency towards the accountant are significantly positively related to mutual understanding.

Suggested Citation

  • Stefanie De Bruyckere & Frederik Verplancke & Patricia Everaert & Gerrit Sarens & Carine Coppens, 2020. "The Importance of Mutual Understanding Between External Accountants and Owner–Managers of SMEs," Australian Accounting Review, CPA Australia, vol. 30(1), pages 4-21, March.
    • Handle: RePEc:bla:ausact:v:30:y:2020:i:1:p:4-21
    DOI: 10.1111/auar.12251
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    Cited by:

    1. Pedroso, Elsa & Gomes, Carlos F., 2024. "Disentangling the effects of top management on management accounting systems utilization," International Journal of Accounting Information Systems, Elsevier, vol. 53(C).
    2. Zahid Ali & Ghulam Mustafa, 2023. "On Accounting Firms Serving Small and Medium‐Sized Enterprises: A Review, Synthesis and Research Agenda," Australian Accounting Review, CPA Australia, vol. 33(3), pages 313-332, September.
    3. Stefanie De Bruyckere & Patricia Everaert, 2021. "The Role of the External Accountant in Business Planning for Starters: Perspective of the Self-Determination Theory," Sustainability, MDPI, vol. 13(6), pages 1-24, March.

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