The CARL System Background information
The CARL System is radically different from any other computer system on the market all of which resemble book-keeping on a computer requiring the intervention of an accountant, whilst CARL goes automatically from a simple single entry of a transaction to final accounts and tax returns in one operation, which takes seconds. For the end user to understand the data they have to key in takes minutes whilst others, take hours and QB produce up to 36 videos to explain how their system works.
At the heart of our software is the copyright CARL system which provides a system of accounting codes and classifications that empowers the end user to accurately submit their own accounts.
Making Tax Digital (MTD)
With MTD starting to come into force I wonder whether it will be successful. My experience over many years is that the standard of record keeping by small firms has changed very little even where they have selected to keep them on a computer using a spreadsheet programme such as Excel or a computer accounting programme such as QuickBooks.
Way back in the 1980’s when Sage came onto the market and I was assessing computer programmes put forward to the ICAEW for accreditation, I commented that unless the user understood and could keep records using the principles of double-entry bookkeeping they would not be able to use a computer programme which was double-entry bookkeeping on a computer and in practice that proved to be the case. Clients who maintained their records on a computer took longer to unravel and put right than those who submitted their records in the old-fashioned handwritten way, referred to as Incomplete Records which have now been made more complicated by transferring them onto a computer.
Today, the only difference from yesterday, is that videos have been introduced to try and teach the user what they are required to do to find their way round the plethora of different menus, screens and procedures. Research has shown that most small businesses strongly resent the time and effort they have to put into book-keeping, a job which fetches them no return at all and computer software on the market today have extended the time and effort.
Accounting Software is Still Under Performing)
Some years ago, I was introduced to an American Software engineer who worked on the QuickBooks programme from the outset. He told me that they initially started to explore the avenue of producing a programme so that businesses could do their own accounts but after extensive tests they discovered small businesses were so incompetent at coding transactions they made a decision to change course and try and find a way to make it easier for accountants to handle small business clients and today with the advent of Smartphones we see them photographing various documents which tells them nothing about how their business stands and where it is going. It’s a filing system and provided they don’t lose or seriously damage their mobile all will be well. Most small businesses do not have either the time, ability or inclination to keep their records regularly up to date which will be necessary when MTD comes fully into play.
When MTD was first muted there was talk a programme would be produced by the government to simplify compliance with the requirements but to date nothing has been revealed.
Some accountants do introduce or refer their clients to particular computer software with which they are familiar but do not take into account when making a recommendation their client’s ability to comprehend or willingness to learn how to use the system. Consequently, the accountant is left at the year end to unravel their client’s attempts at understanding not only the instructions but also interpreting them on the computer. All good fee earning material for the accountant.
Contract Between Client and Accountant/Accounting Software
I have been reviewing today’s relationship between practicing accountants and their small firm clients and from what I have learned it is little if any different to what it was in the 1980’s. The vast majority of small firms engage the services of accountants to produce year end accounts, some months after the year end, from the wide variety of records they keep whether manually or on a computer. There is no standardisation or uniformity for handling these clients. Where records are kept in a form that is not computer compatible, they limit the benefits of a computer as they have to be martialled into a format to enable them to be acceptable for computer input.
Many small businesses engage accountants’ services to get their indiscretions past HMRC and reduce the risk of being chosen for an investigation. It is against this background that HMRC are hoping to introduce MTD. When independent reviews written by authors who examine in depth and report on the accounts produced by businesses from Quick Books and similar programmes, they read like horror stories they are so massively inaccurate they beggar belief.
Many years ago, I was invited, as a former research lecturer and main member of the IT faculty, to join a residential consortium for a week to review the future educational requirements of those aspiring to become Chartered Accountants. The meeting was dominated by members from major accountancy firms who had little experience of handling small firms. My suggestion that in future accountants would need to have an understanding of the fundamental principles of computer programming fell on deaf years, apart from one attendee who came from a small accountancy firm and clearly understood why I was making the suggestion which was prompted my decades of research and development work I had been carrying out at the request of the ICAEW.
Powerful gimmicky advertising is selling computer programmes to accountants and their clients but it is not realistic to what is required to generate reliable up to date accounts on which business, finance and tax advice can be given. Businesses and most accountants are ignorant when it comes to assessing a computer programme which promises the earth but delivers nothing intelligible in accounting terms to the business. My years with the IT Faculty of the ICAEW and the ICAEW project I was involved with taught me many things, not least that I would not develop and market a product based on the ignorance of the market and hype about being up to date if you kept your records on a computer.
I went on IBM training courses who were seeking to recruit programmers. I explained the CARL System to them and a few months later I received a letter from IBM containing the following ambiguous comment “We will not be held responsible for infringement of your copyrights however it may arise”. I contacted my Patent and Copyright agents who made me an appointment for the same day to see lawyers in London who specialised in Patent and Copyright law. After a few hours the five lawyers told me the copyrights were watertight and this was proved later when I won infringement of my copyrights against firms of accountants. IBM, however, were not the first international firm to look into acquisition of my copyrights and Kalamazoo Business Systems became a partner in my firm with the principle objective of acquiring them.
MTD – Building Castles on Sand
I mention again my concerns about the introduction of MTD in April 2020, next year, based on my fifty plus years of experience studying the handling of small firms accounting and taxation requirements and have proved beyond reasonable doubt how they can be handled better by the accountancy profession operating the CARL System which enables the backlog of accounts to be brought rapidly up to date which will be absolutely necessary for MTD to operate efficiently.
There are three key factors that the architecture of a 21st century computer programme requires: –
- Simplicity, ease and understanding of the data to be input into the system by the business proprietor.
- Verification of accuracy of data input to ensure instant production of accurate accounts and tax returns without the intervention of accountants.
- The incorporation of artificial intelligence to produce advisory reports to assist proprietors in making business decisions.
Until the contract between the accountancy illiterate average user and the accountancy jargon heavy accountant and software is completely revamped, there will continue to be a mismatch in the data needed for accurate MTD and the ability of the end client to provide it.
The copyrighted C.A.R.L. (Computerised. Alpha-mnemonic. Response. Language) System achieves all of the three requirements outlined above.