Our Cost-Efficient Philosophy and Strategy
By: Kam Suet Cheng (Sue Kam)
Chartered Certified Accountant
January 2020, Singapore
I would like to explain on how we, at Sue Kam Accounting Pte. Ltd. could deliver our professional services at such an unbeatable low cost. We do that by being cost-efficient. As a professional firm, our main cost item is not goods. Our professional staff cost is our main and major cost, hence, we would exploit these not by over-working, under-paying our valued staff but by producing the best practically feasible output using the most efficient method. Let me start by first explaining some accounting jargons such as the Concept of Materiality.
Materiality means Significant, Relevance and Criticality. Relevance is usually applied by Legal Professional, such as what most of us may have already heard in movies, where lawyers debate in court, a prosecutor would question the defendant "Where were you during the Material time?" or "The fact that he was a prefect during his school days is not Material." In this context, Material mainly meant Relevance. When Accounting Professionals mention Materiality, we usually mean Significant, while not forgetting Criticality. Thus, our output documents are mostly prepared, giving a "True and Fair View", and not on a "Correct" basis. "True and Fair View" basically means that the whole account primarily gives an undistorted impression of the Business' performance and financial credibility but it lacks detailed accuracy or correctness which are not Material. During those years (more than half a decade) when I was working a an Audit Professional in the big 4 auditing firm, we usually regard most differences of 5% or less, or absolute amounts of $1,000/= or less as "Not Material" and no further work needs to be done, unless, the difference discovered is indicative of Criticality, such as there is reason to suspect something more serious, for example, fraud. Or further work would be done to immaterial amounts, if that caption of expense is Critical, such as an Audit Fee.
Realistic and Practicality
In designing a Cost-Efficient Strategy, we strive to serve our clients, fulfilling their most basic requirements while giving option for higher scope. Which means, our basic package offered to our clients are not over-scoped while we also offer add-on to clients who do not mind the cost-loading for higher scoped outputs. Let me explain our processes to you in more practical terms. As most of you are well experienced Business People, I am sure you will understand after I explain these to you. For example, our trainees or qualified accountants may take only one day to do a first compilation of an account, which gives a "True and Fair View" as explained above, and hence charge our client only S$700/=. However, our client complains that this caption of expense is out by S$2.80, that caption is out by S$55.60, and that not balanced by S$77.85, and for these, our professional staff takes another 3 days to close off these differences, in that process, over-turning all the files, casting all the figures over and over again, flipping through over each and every invoices, bills, statements and others. Thus, we need to end up putting a 300% cost-loading to our original unloaded price, that means, the final bill would be S$700 x 400% = S$2,800. However, to serve the needs of our valued clients who would prefer detailed accuracy, we will only charge a cost-loading of between 100% to 150% to the basic price, which in the above example, the bill would probably be S$700 x 250% = S$1,750, for an account which we quoted S$700/= in basic price but our valued client would like detailed accuracy. Preparation of accounts involves many contingencies and we may undercharge our new clients for the first set of accounts. We try not to increase our price to our clients whom are already happy and excited of the great low price that we offered to our clients, as we are also excited that our clients are happy. We could not bear to turn off the smile on our client's face. For that, we would try to think, sit and discuss with our client, to see how our client can facilitate us to keep the price low. Fee increase would be the last resort.
Not to over-comply with Statutory Requirements
To keep cost low, we simplify the accounts, not over-complying with Statutory Requirements, that means, doing away with stuff which are not Compulsorily Required, however, as mentioned in the earlier paragraph, there is option for cost-loading for clients who opt for more details.
The prices that we published for Company Accounts are Super Low. Most people doubt if that is really true. Well, like what I have explained before, we do not start by over-scoping, we give the raw price and then give option for clients who want or need higher scope. Most Companies are individual or family owned with no outsiders and the family members are assumed to be united, not fighting, suing or such. Majority (more than 50%) of the times, business owners just keep their Company Accounts in their drawer and cabinets for years and it is not shown nor presented to any external parties or Government Authorities. As such, we provide Draft Accounts to our clients, charging the basic price. These accounts are mainly prepared by our junior but well trained Accounting Professionals, briefly but not extensively vetted by our Qualified Accountants. It is good enough as a basis to submit Tax Returns and ACRA Filing and then sit inside your cabinet but it is not good enough to be shown to any external parties, including your other investors/shareholders within your Company, as it may have missed out certain off-balance sheet important Notes Disclosures such as Capital Commitments, Contingent Liabilities or Related Parties Transactions. If we have first produced the Draft for you, and months or years later, you need to have a better version of that to be presented to external parties or Government Authorities, please come back to us, we can even attend to you on an urgent basis. What we will do is, more extensive manual vetting by Qualified Accountants, add a Compilation Report page that is signed by a Chartered Certified Accountant, nicely bind it and it would be ready to be presented to any external parties. The cost loading is 100%. For example if the raw price for that Draft Accounts is S$798/=, the cost loading is also S$798/=, making the total costs S$798/= x 2 = S$1,596/=.
We already have on file, standard templates which enable us to settle some accounts quickly, using our method. Should we require to do certain accounts / jobs which do not directly fit into our templates and method, we would require cost-loading for that job. However, we would strive to align the work into our standard method so as to remove or reduce this non-standardization.
I have explained a lot. Good Bye for now. Come look for us, see you!
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Kam Suet Cheng (Sue Kam)
Chartered Certified Accountant
Sue Kam Accounting Pte. Ltd.
Co. Regn No: 200708151D
January 2020, Singapore