Academic journal article Journal of Accountancy

Should Firms Share Financial Information with Staff? Yes

Academic journal article Journal of Accountancy

Should Firms Share Financial Information with Staff? Yes

Article excerpt

How much should staff members know about a firm's financial status? Does openness boost morale and productivity or cause confusion and resentment? Partners' answers to these questions tell a lot about how they run their practices and work with their clients. But which approach makes for a more successful firm? Two practitioners describe their own management styles and how they have benefited their firms.

YES says Ron W. Stewart

RON W. STEWART, CPA, is a partner of Stewart & Company, Monroe, Louisiana. A member of the American Institute of CPAs management of an accounting practice committee, he was the moderator of the 1990 AICPA National Small Firm Conference. His firm has four CPAs and three associates and performs tax and financial planning services for individuals and closely held businesses.

Why won't our staff members think and act like owners or partners? Perhaps if we want them to do so, we have to give them the same financial information that partners get. Instead, many of us have practiced mushroom management: Keep staff in the dark and feed them small bits of financial information.

I propose that we end mushroom management and begin sharing important firm operating data with staff. If we do, I believe we'll create healthier firms and better professionals.


We spend enormous amounts of money on continuing professional education to expose staff to the technical aspects of accounting, yet we hide the business side from them. We take pride in hiring and developing the best staff to help clients solve their business problems. Why aren't we using their skills to help solve our business problems?

One possibility is that we hide this information from staff because we don't understand it either-or at least what it means to our firms. Although CPAs are experts in advising clients, many don't apply their expertise to their own businesses. They are blind to the problems-and opportunities in their own firms. Among the benefits they miss are those gained by sharing financial information with staff, which are similar to those in teaching: The teacher learns rapidly to try to stay ahead of the students.

Sharing financial information forces us to take a fresh look at ourselves. Managers often miss something obvious but staff can see things immediately in ways we do not. This sharing creates a synergism that benefits staff and owners.

Each time I attend a management of an accounting practice conference I come away amazed at the new information I obtain. The most valuable insights usually are picked up in roundtable discussions of how other practitioners run their firms. The conference atmosphere allows participants to meet on an equal footing and share their insights in a relaxed environment.

Opening up such a forum to our staffs will accomplish similar results. I advocate periodic presentations to staff, similar to the stockholder meetings that public corporations hold. This sort of openness creates a partnership between staff and owners and makes staff feel more connected to the firm. Sharing financial information also helps prevent misinformation and rumors. There is always a mystique about something kept secret; once it is revealed it becomes more routine in nature.


Firms that adopt this policy ensure themselves a sophisticated and knowledgeable pool of future firm leaders. Management skills will be the secret weapon of the more successful firms in the future; our clients as well as our staff will demand them. If we don't create the environment in which management skills can be developed, clients and staff will leave. It doesn't make sense that we allow our staff to study the clients'books and make recommendations about how to run their businesses, but we don't trust them to play this role in our own firms.

Sharing financial information forces staff and owners to be accountable to themselves and to each other. …

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