Benefits And Impact Of Outsourcing Accounting Services

Advantages of Accounting Outsourcing

It needs to be discerned that in terms of the various types of the changing economy there has been different types of the operations which are considered with outsourcing of the accounting services. In addition to this, the possible reasons for the corporate failures in Australia is depicted with increased competition in the market and lack of skillful workforce or resources. Moreover, the CEOs and the CFOs are depicted with increasing the business for achieving the higher edge against thee competitors.  Some of the most evident advantages of incorporating the accounting outsourcing needs to be identified in terms of cost of capital, increased efficiency, reduction cost and starting new projects with more ease. The concept of accounting outsourcing is also beneficial in terms of focusing on the core business.  Some of the other advantages of the Accounting Outsourcing has been identified as reducing the risk in terms of changes in technology, competition, government regulations and financial conditions. The proper bookkeeping is seen to be evident with prime importance in accountancy. Reducing the risk aspect is also recognized with financial conditions, government regulation and market risk.

Some of the important objectives for the study are seen with assessment of the relationships which exist in the outsourcing process of accounting. In addition to this, some of the other discourse of the study will be based on determining the relationship which exists in the outsourcing functions of accounting.

Research Questions

The research questions formulated for the research study are stated as follows:

1. What is the impact of accounting outsourcing on profitability and performance?
2. What is the relation of accounting outsourcing and its effect on the structure of organizational?
3. What are the different types of Accounting outsourcing and its issues with the management?
4. What is the effect of accounting outsourcing on small and medium business units?

In the global economy, the work of the business is being provided to the outside parties for which the payment is made in accordance with the contract which has been made and that is identified as outsourcing. There are various areas of the business in which it has been adopted and that includes the reporting, accounting and auditing which is performed in any entity. There are various aspects which are affected such as fee, consistency and relevance of the process which is carried in relation to accounting (Wang et. al., 2012).

Outsourcing is the not a simple process and when it is used for accounting then it is needed that there shall be the inclusion of proper methods and processes by which it will be implemented in an effective manner. According to Oshri, Kotlarsky and Willcocks (2015) the process of outsourcing is affected by various reasons. There is the research which is made and in accordance with the results of the same, it can be said that in the identification of the process there is the inclusion of the economic activities by which the whole process is affected and the designing is made accordingly.

Risk Reduction through Accounting Outsourcing

As stated by Maelah et. al., (2012) there are various such attribute and areas by which the functioning of the outsourcing process is affected and that includes the areas related to cognitive, normative and regulative institutions that are involved and the working of which is monitored and controlled by the various entities and the rules which are formulated by them in this respect. The social factors are also taken into account under this. The further factors which will be affecting this process include the complex process that is involved under this and the contract related matters which are there as there is the contract on the basis of which the whole working is made.

The outsourcing of the accounting work is made so that the better performance is made and also there will be cost saving with the help of this. From the study which is made by Nielsen et. al., (2015) there are various such aspects on which major impact is made and that include the return which is being earned on the assets and the equity of the business. The organizations which adopted this system of outsourcing experienced a change in the amount of the profits which are being made by them. In accordance with the views of (Sneidere et. al., 2013). it has been identified that there are various such entities in which the impact has been noted in relation to this. They have adopted the accounting outsourcing and in that there was an improvement which was made in the overall profitability of the business and this was because the cost which is incurred under the company is reduced.

By the development of this approach, there are various other benefits which are received such as the business has experienced the increase in the level of production which then affects the profits in a positive manner. The various ratios such as inventory turnover, asset turnover ratio and net profit margin and several other ratios are being affected by this. There are the mixed results which are obtained and by that both the adverse and favourable impacts are observed.

The impact of outsourcing of the accounting activities is vast and that is noted by the businesses which are using this for the past many years. The transfers that are made under this are due to various reasons which are involved. As per the views of Yu, et. al., 2016 the entities opt for this as the technology keeps on enhancing and it is difficult for the business to maintain the accounting in accordance with that. Together with this the funds are also the cause there is a shortage of them and that leads to the adoption of the outsourcing service. Their audit related functions are also outsourced in relation to the internal audits which are being performed by the government-related entities. The process which is carried under this affected due to various issues which are faced such as the process of auditing require the involvement of committee but if that is not present then the adverse impact is faced. Also, the delegation which is made in respect of all the duties is not made in the proper manner and that leads to an adverse impact on the whole process.

Impact on Reporting and Disclosures

The process which is involved will be requiring that the size and nature of the business shall also be taken into consideration by the entities which are outsourcing and this is stated by Lee et. al., (2012) there was the research which was made and in accordance with that the information has been collected from various entities which are listed in Australia and are carrying the operations at large scale. It is identified that they are also using the outsourcing process and this is mainly used for the internal audit related matters which are involved. By the use of this there is the impact of the reporting which is made and also the disclosures that are made are affected. There is a difference in the quality of the work and also the independence of the auditor is affected by this leading to disclosure related issues. There is growth in the scope and the opportunities which are available for the internal auditors.

Kang et. al., (2012) states that by the use of outsourcing and the effects which are identified on the reporting and disclosures it can be determined that the prohibitions which are made under the Sarbanes-Oxley Act of 2002 are affected as the work which is to be performed by the internal auditor is nor performed by the external auditors. In the audit function, there are various elements which are required to be evaluated and that include the risk involved and the auditor’s independence. The improvement which is made in the quality of the audit and the negative impacts which can be faced are minimal so this can be adopted and there will be additional benefits which will be received by the help of this.

The organization structure is most important in any entity and by the use of the outsourcing which would be disturbed. As stated by Massini and Miozzo (2012) in the various types of companies involved would also be affected. Such as for the local authorities, private companies and other health-related services which are provided at the national level. The structure which is followed under this is affected to great extent and the same will be distressing the overall process which is followed by management.

The structure of the entity will be having the influence in a positive manner as there will be better services which will be provided and the management has time which they can use for several operations. This will be helpful in the making of such policies and procedures by which overall improvement will be attained in the services which are provided and decisions can be taken effectively by which proper development will be made.

Outsourcing and the Management Structure

In the business, there are various changes which are faced due to the adoption of the accounting and auditing outsourcing. Shahin and Azar (2013) states that the cost which is there in respect of the transactions will have to be maintained and for that proper approach is followed. This will be requiring that properly skilled professionals are hired and there was the evaluation which was made by a collection of the information from various sources and entities which are operating in the market. The characteristics which are possessed by the several authorities in the entities are identified and evaluated so that it can be determined that how much effect they are in managing of the outsourcing process. There are many activities which are performed in all the medium and small organizations and due to them, any issues are faced in the process of management as they make the entire process complex. There are several issues which arise and are faced with completing the process of outsourcing of accounting. There are factors in the society which keeps on changing but there will be no adverse results which will be made on the personal characteristics of the personnel involved.

The manner in which the accounting is being carried in the company will also be affecting the process of outsourcing and this will be too great extent if the management is involved in that. The research for the same was carried in Australia on the hotels and by that collection of the information has been made and it is determined that the process which is involved in the ascertainment of the cost and other related administration charges is a very complex process. Management faces difficulties and there is the impact of the same on the overall outsourcing process.

The adoption of the outsourcing is the result of various issues which were faced in the entities. As stated by Yang et. al. (2012), the companies were not having the required knowledge about all the rules and regulations which are to be adopted in the carrying out of accounting work. There are no proper principles which are adopted and by that the accounting which is made is affected and no proper results are attained. Due to this, the trend of outsourcing increased and more of the work is provided to the externals to be done in an effective manner. By the adoption of the same, there will be additional benefits which will be received from other rivals.

In this process, there are various new approaches which are introduced and it is identified by Benaroch et. al., (2012) in this the introduction of cloud-based accounting is a major change which is beneficial. Through this, all the essential information is available in a proper manner that provides benefit in decision making process. The new technology is adopted and by that the security of the information is improved.

The procedure of conducting the study have been followed with a deductive approach of research. Therefore, it has included the opinion of several authors and researchers who have stated about the impact of accounting outsourcing in various countries.

The data sampling method for the primary analysis is based on simple random sampling method. This is mainly done to ensure that the opinions of all the respondents are unbiased in nature thereby providing a reliable source of information. The total sample size selected for the study is depicted with 50 respondents.

The data collection method is based on both primary and secondary sources. The primary analysis has been conducted with survey method in which the accounting professionals of Australia have been questioned about several parameters of accounting outsourcing services. Some the main range of questions have been considered with type of their industry, countries in which accounting services are provided and nature of accounting services. The secondary sources of information collected with appropriate journals, articles and e-books.

The method of data analysis has been considered with quantitative techniques and thematic techniques. In terms of primary data analysis, the presentation of data has been based on cumulative frequency analysis and bar charts. The questionnaire has included different variables as applicable with the nominal scale. In addition to this, the segregation of options has been maintained with specifying response number to the individual variables. For instance, the respondents age group has been segregated in the following manner (18-25) as “1”, (26-33) as “2”, (34-40) as “3”, (41-48) as “4”, (48 and above) as “5”. The software used to conduct the data analysis is SPSS. In addition to this, the analysis of the data for secondary research is followed with inferential approach.

 

1. What is your age
	Frequency	Percent	Valid Percent	Cumulative Percent
Valid	18-25	16	32.0	32.0	32.0
26-33	16	32.0	32.0	64.0
34-40	12	24.0	24.0	88.0
41-48	6	12.0	12.0	100.0
Total	50	100.0	100.0

Table 1: Age of the respondents

(Source: As created by the author)

It can be seen that the frequency table shows that the most of the respondents are seen with in the age range of 18-25 years. This is evident with total frequency of 16 for respondents under 18 to 33 years. It is to be also depicted that the second-highest group of individuals are between the age of 34-40 years.

The graphical representation has shown a similar trend of most of the respondents are seen with in the age range of 18-25 years. Additionally, a decreasing respondent among the age group of 41-48 is also evident in the bar graph.

2. Please select the type of industry
	Frequency	Percent	Valid Percent	Cumulative Percent
Valid	Co-operative society	1	2.0	2.0	2.0
Partnership	17	34.0	34.0	36.0
Private Company	17	34.0	34.0	70.0
Public Company	5	10.0	10.0	80.0
Sole Proprietorship	10	20.0	20.0	100.0
Total	50	100.0	100.0

Table 2: Type of industry

(Source: As created by the author)

The highest type of industry which was involved in taking accounting outsource service can be seen with partnership and private companies. This is evident with the frequency of 17. In some cases, sole proprietorship business also takes the assistance of accounting outsourcing. This mainly suggests that public companies are cooperative societies are not much interested in taking the assistance for accounting outsourcing. This may be a main reason due to the available support from the government itself. On the other hand, several types of small businesses and sole proprietorship firms may need assistance of professionals who will be able to provide a more competitive edge to the business.

Similarly, the graphical representations clearly show that the companies availing the service of accounting outsource any merely depicted with partnership and private companies. The decreasing trend evident among cooperative society and public companies.

3. Name of country to which outsourcing services provided ?
	Frequency	Percent	Valid Percent	Cumulative Percent
Valid	China	8	16.0	16.0	16.0
Japan	10	20.0	20.0	36.0
Others	4	8.0	8.0	44.0
UK	20	40.0	40.0	84.0
USA	8	16.0	16.0	100.0
Total	50	100.0	100.0

Table 3:Name of country to which outsourcing services provided

(Source: As created by the author)

The categorisation of accounting services provided to other countries are mainly segregated into China, Japan, UK and USA. The other countries are mainly seen with Asian subcontinent nations such as India, Pakistan, Bangladesh and Singapore. The highest frequency for country in which accounting outsourcing services is provided from Australia is mainly evident in the UK. This is directly in relevance to compliance of IFRS in both Australia and the UK. This makes it more compatible for the accounting professionals to share their knowledge and skills in terms of outsourcing services.

The graphical representations similarly show that the highest services of accounting outsourcing is provided to the UK and the second-highest service is provided to Japan.

4. Service nature of the companies in which outsourcing is provided?
	Frequency	Percent	Valid Percent	Cumulative Percent
Valid	Education	2	4.0	4.0	4.0
Finance/Banking	14	28.0	28.0	32.0
Information Technology	15	30.0	30.0	62.0
Manufacturing	11	22.0	22.0	84.0
Services	8	16.0	16.0	100.0
Total	50	100.0	100.0

Table 4:Service nature of the companies in which outsourcing is provided

(Source: As created by the author)

The nature of the services provided by the companies which look for accounting outsourcing are mainly seen with education, manufacturing, information technology, finance and banking. As per the frequency analysis it can be stated that information technology mostly seeks for such services. In addition to this, companies associated with finance and banking are also depicted to rely on accounting outsourcing services from Australia.

It is evident from the graphical representation that services providers associated to finance and banking, information technology and manufacturing are mostly involving seeking for accounting outsourcing services.

5. Type of industry to whom services are provided
	Frequency	Percent	Valid Percent	Cumulative Percent
Valid	Co-operative society	4	8.0	8.0	8.0
Partnership	6	12.0	12.0	20.0
Private Company	19	38.0	38.0	58.0
Public Company	11	22.0	22.0	80.0
Sole Proprietorship	10	20.0	20.0	100.0
Total	50	100.0	100.0

Table 5: Type of industry to whom services are provided

(Source: As created by the author)

The type of the industries in which accounting outsourcing services are provided is considered with private companies. Therefore, it is clearly evident that private companies of one service seeks for accounting outsourcing service from another Private company.

The graphical representation of the data clearly shows that private companies of other countries mostly depend on accounting outsourcing services of Australia.

6. Size of industry to whom services are provided
	Frequency	Percent	Valid Percent	Cumulative Percent
Valid	Large Scale	14	28.0	28.0	28.0
Medium Scale	20	40.0	40.0	68.0
MNC	8	16.0	16.0	84.0
Small Scale	2	4.0	4.0	88.0
Tiny	6	12.0	12.0	100.0
Total	50	100.0	100.0

Table 6: Size of industry to whom services are provided

(Source: As created by the author)

The frequency distribution for the size of the industry in which services are provided can be clearly identified with medium scale enterprises. This data is clearly evident with 20 respondents who have agreed that the accounting services are mostly evident among medium scale companies.

The graphical representation of the data further shows how the medium enterprises mainly depend on the service associated to accounting outsourcing.

7. Type of accounting outsourcing service provided to the client
	Frequency	Percent	Valid Percent	Cumulative Percent
Valid	Account Payable	15	30.0	30.0	30.0
Account Receivable	5	10.0	10.0	40.0
Budgeting and Planning	5	10.0	10.0	50.0
Cash Flow/ Treasury	11	22.0	22.0	72.0
Payroll	14	28.0	28.0	100.0
Total	50	100.0	100.0

Table 7: Type of accounting outsourcing service provided to the client

(Source: As created by the author)

The type of the accounting outsourcing services provided to the client’s ranges from accounts payable, accounts receivable, project, planning, cash flow, treasury and payroll services. It is evident that most of the foreign clients rely on Accounts Payable services which is done by accounting professionals of Australia. In addition to this, there is also a considerable amount of demand for payroll accounting.

The graphical representation of the data clearly shows how Accounts Payable, payroll accounting and cash flow/Treasury transactions are the most required services among the companies of other countries.

8. In your opinion specify the reason for outsource and accounting activity to the foreign countries
	Frequency	Percent	Valid Percent	Cumulative Percent
Valid	Accuracy	3	6.0	6.0	6.0
Concentration on other functions	23	46.0	46.0	52.0
Cost Reduction	8	16.0	16.0	68.0
Efficiency	7	14.0	14.0	82.0
Quality Work	9	18.0	18.0	100.0
Total	50	100.0	100.0

Table 8:Reason for outsource and accounting activity to the foreign countries

(Source: As created by the author)

The rational for outsourcing and accounting activities are selected from accuracy, quality of work, efficiency, cost reduction and concentration on other functions. It is evident that most of the foreign firms rely on accounting outsourcing for concentration on other functions.

A similar nature of the data is also evident in the bar graph which shows how most of the services of foreign countries depend on concentration on other functions.

9. Cost difference among Australia and other countries in accounting
	Frequency	Percent	Valid Percent	Cumulative Percent
Valid	Employees Remuneration	5	10.0	10.0	10.0
Hire Charges	2	4.0	4.0	14.0
Investment in Computers	14	28.0	28.0	42.0
Investment in Fixed Assets	7	14.0	14.0	56.0
Telecom	22	44.0	44.0	100.0
Total	50	100.0	100.0

Table 9:Cost difference among Australia and other countries in accounting

(Source: As created by the author)

The most evident form of cause difference among Australia and other countries in accounting outsourcing is evident among the telecom industries. Therefore, the telecom operators mostly involve in accounting services for reducing their cost on in-house accountants.

The graphical representation clearly shows how telecom industry and investment in computers are greatly benefited with the cause difference led by accounting outsourcing.

10. As per your opinion what are the advantages of accounting outsourcing services to other countries ?
	Frequency	Percent	Valid Percent	Cumulative Percent
Valid	Increase Employment Opportunities	17	34.0	34.0	34.0
Increase Source of Income	9	18.0	18.0	52.0
Knowledgeable Accounting Practices	13	26.0	26.0	78.0
New Technology	9	18.0	18.0	96.0
Source of Foreign Income	2	4.0	4.0	100.0
Total	50	100.0	100.0

Table 10: Advantages of accounting outsourcing services to other countries

(Source: As created by the author)

Some of the most evident advantages of this service can be seen with increase in employment opportunities. This is mainly applicable for countries such as India, Pakistan and Singapore where accounting outsourcing considerably increases the employment opportunities.

The graphical representation of the data clearly shows how the advantage of accounting outsourcing is mainly evident among increased employment opportunity, knowledgeable accounting practices and introduction of new technologies to some extent.

11. Kindly specify the important term and conditions of outsourcing accounting contract
	Frequency	Percent	Valid Percent	Cumulative Percent
Valid	Dispute resolution	7	14.0	14.0	14.0
Others	2	4.0	4.0	18.0
Pricing	12	24.0	24.0	42.0
Scope of work	15	30.0	30.0	72.0
Termination of Contract	14	28.0	28.0	100.0
Total	50	100.0	100.0

Table 11:Important term and conditions of outsourcing accounting contract

(Source: As created by the author)

The most important terms and condition for accounting outsourcing can be evident with Scope of work and termination of contract. Therefore, every company before engaging into such a service ensures that the terms and agreement under the scope of work and termination of contract is clearly read and acknowledged.

The graphical representation also shows how scope of work and termination of contract is highest among conditions for outsourcing accounting contract.

12. Skills and Knowledge required for outsourcing accounting
	Frequency	Percent	Valid Percent	Cumulative Percent
Valid	Accounting Knowledge	3	6.0	6.0	6.0
Computer and Internet Knowledge	5	10.0	10.0	16.0
Computer Operating skill	4	8.0	8.0	24.0
Managerial Skill	18	36.0	36.0	60.0
Outsourcing Process Knowledge	20	40.0	40.0	100.0
Total	50	100.0	100.0

Table 12: Important term and conditions of outsourcing accounting contract

(Source: As created by the author)

The skills and knowledge required for outsource accounting is mainly seen with outsourcing process knowledge among the accountants.

The trend representation clearly shows how the managerial skill and outsourcing knowledge is highest for outsource accounting.

13. Issues encountered in accounting outsourcing?
	Frequency	Percent	Valid Percent	Cumulative Percent
Valid	Employees Problems	6	12.0	12.0	12.0
Knowledge Problems	13	26.0	26.0	38.0
Quality Work Problems	11	22.0	22.0	60.0
Quality Work Problems	4	8.0	8.0	68.0
Technical Problems	16	32.0	32.0	100.0
Total	50	100.0	100.0

Table 13: Issues encountered in accounting outsourcing

(Source: As created by the author)

The main issues encountered in such a service is considered with possibility of technical problems. This is evident with the response of 16.

The trend analysis also shows that along with the technical problems the problem of knowledge and quality work is also an issue with accounting outsourcing. This may be a result of long and tedious process involved in complying of accounting policies for different countries.

14. Technical Issues comes under the Outsourcing Accounting Business
	Frequency	Percent	Valid Percent	Cumulative Percent
Valid	Computer Problems	13	26.0	26.0	26.0
Conversion of Data Problem	13	26.0	26.0	52.0
Internet Problems	22	44.0	44.0	96.0
Software Problems	2	4.0	4.0	100.0
Total	50	100.0	100.0

Table 14:Technical Issues comes under the Outsourcing Accounting Business

(Source: As created by the author)

The most evident form of technical problems can be encountered with computer problem and conversion of data.

The graphical representation shows a similar issue by highlighting Internet problem as the major threat to such a service.

Business process outsourcing is a solution that seeks to achieve advantages against competitors and is a very important part which seeks to expand new business Outsourcing is a great way to achieve high efficiency and its various types of the impact on the profitability and seeking cost savings in terms of both profitability and performance. When business process outsourcing was first introduced, it was only used in manufacturing companies.  However, having an enormous development in technology, the process of outsourcing has become a wider and bigger process (Halmeenmäki, 2015).

Outsourcing has recently gained in momentum, with companies looking to develop skilled workers outside their companies with less money. The difference between skilled people mattered less with companies more intent on saving more money. With competition more becoming more manifold, it is evident that companies need to find new ways to become successful (Shehane, Huan, & Ali,2014). Business outsourcing provides companies with a certain competitive edge.  Outsourcing non core operations will increase productivity and make the management focus more on core competence. This will help the company be more competitive and will give a more professional standard.

The outsourcing has also caused the loss of people’s jobs in the local sector. It has created both positive and negative outcome. The positive has been people getting an opportunity to prove their hard-earned skills. The workers, who are willing to adopt to changes have a chance to achieve prosperity (Halmeenmäki, 2015). Outsourcing  a business is usually attached to losing old employees and replacing them with new companies. This may damage work motivation, morale and productivity.

The company outsources its financial and accounting facilities that include general ledger, AR-AP services.  These services are designed to make progress in terms of building transparency, minimize the costs and intensification of the efficiencies through  a common solution (Samantra,  Datta & Mahapatra, 2014)

In this study the overall interviews that were conducted had a distinct opinion , according to the interviewees.  The interviewees stated that there was not enough time that were reserved for the outsourcing process. The global implementation of the outsourcing software caused too much work in a short period. Understanding the magnitude of the process could lead to mistakes and lapse of memories (Upadhyayula, Karthik, & Karna, 2015). Earlier experience on outsourcing would have been more suitable because people were uncertain of what is currently happening and what the company is required to do. The implementation was extremely challenging and time consuming. The transfer of the process was not successful on behalf of the service provider. However there is still a lot of work to be done regarding achieving a more functional quality (Mu,  Benaben,  & Pingaud, 2018).

According to the interviewees, the whole outsourcing process was successful, although there were a few disappointments. In this study, there were two biggest challenges that were identified.  The two biggest challenges include cultural differences and lack of outsourcing experience (Halmeenmäki, 2015). These factors are highly influential and can cause even more challenges. A cultural education system should have been conducted before outsourcing in order to mitigate the disaster. Hiring another consultant also could have compensated the lack of experience regarding this field. Both of these challenges reflect unprepared planning. The decisions were made among the top management and the low-level employees at supervisory level were not informed or consulted. However better inhouse communication between white collar and blue collar workers could have prevented those challenges from occurring (Onjure, Wanyoike & Mungatu, 2018).

“Accounting outsourcing turnback: process and costs”- Ruhanita Maela

Outsourcing, according to this study refers to the sub contraction of a service or activity that is given to a third party. Companies that are successful in outsourcing practice often leverage their capabilities and investments. They leverage these abilities by outsourcing functional activities that include complementary, integrating and duplicate functional activities. Companies normally outsource their tertiary activities to specialized 3^rd parties. This permits the organizations to concentrate on the core capabilities. This will advance overall performance as well (Maelah et al., 2010).

One of the outsourcing functions is that of accounting. AO refers to the transfer of a part of accounting purposes that is provided to a 3^rd party. It provides measures to the fully owned subsidiaries that helps in cutting cost and obtaining competitiveness. AO safeguards a wide variety range of processes. These processes range from transactional activities of payroll, AP and AR. This article focuses on the issue of outsourcing turnback. AO turnback is the process of affecting outsourced activities to an in-house role. Although outsourcing has tremendously been popular over the last few years, there is a widespread assertion that the AO failure rate is high. This is because of the high risk that is linked in this area (Sani,  Dezdar & Ainin, 2013).

A further study shows that the companies that are successful in AO work often have a strong consideration of their core abilities. They have also done adequate investigation regarding these core activities. They have most importantly strategic and developed clear objectives of outsourcing activities. A significant quantity of studies has debated on the association in AO among clients and vendors ((Maelah et al., 2010). These learnings have nevertheless not conversed on the disappointments in terms of AO connection.  The above contract of outsourcing is engaged by both the client and vendor of the outsourcing parties. There is a huge demand for companies to endorse outsourcing contracts that are fully completed (Cullinan & Zheng, 2015). There has been no study till now that has investigated the contract issues in outsourcing setbacks and their corresponding influence on the involved parties. The turnback process as suggested by Eliot, forms a part of a 6-phase process that handles turnback situation that includes I) interpretation of   the current outsourced preparation II) choice to lessen or dismiss turnback III) turnback plan development IV) transitioning the turnback V) completion of the turnback VI) continuing outsourcing reevaluation of outsourcing (Halim, et al., 2017)

This concept is part of a learning which focuses on the risk and control that is evident in Malaysian AO. It includes a survey and a case study. The case study is built on three pairs of relationships that focus on AO. The article concentrates on one case study that knowledgeable outsourcing turnback. DEPRO technologies purchased its in-house accounting actions from an outsourcing vendor. A sequence of interviews was done with people that included the accountant, the corporate division’s head and the finance and administration head of the company DEPRO technology. In addition to these initial interviews, subsequent interviews were conducted on the acceptance of continuing tests. These challenges were related to the process of turn back (Maelah et al., 2010). The interview data were recorded and interpreted manually. These were done using the theoretical framework which helps them in guiding the analysis. These discussions were reinforced by reading literature sources and various theoretical studies that were involved in this study (Liakhovych, 2017).

On analyzing the case study, it was found that the accounting department of DEPRO technology company faced some common problems when they outsourced their accounting works to Alpha associates. These problems included the likes of errors and mistakes. These errors and mistakes were made in relation to incorrect reporting  of assets and expenses. The management of DEPRO technology made the decision to terminate the contract that the company had with the Alpha Associates. Alpha associates, on the other hand felt that DEPRO technology was not in a position to continuously proceed with outsourcing work that was done  in house. They even tried to make negotiations for renewal of contract as well (Hafeez, & Andersen, 2014).

From the above study, it can be seen that the outsourcing of accounting at DEPRO technology can be viewed by the management as a strategic decision making. This permits the corporation to accentuate on its main activities that is evident at the establishment’s initial stage. The findings of this study take the help of existing literature in outsourcing and its application in outsourcing activities. The findings prove that outsourcing of accounting has a lot of turn back and there are major issues that are related with it. This paper provides a description of the case study of an accounting turn back process. This turnback process is based on the six-stage process that has been written above. The AO turn back at “DEPRO technology” has reached the stage of completion. Hence the future study of the company should focus on determining whether an ongoing revaluation of its in-house mix. The evidence presented in this study relates to a small sized firm. A more widespread study of large sized firms might have yielded dissimilar results.

“Factors influencing Accounting Outsourcing Practices among SMEs in Pakistan context: Transaction cost economics and Research Based Views (RBV) prospective- Ajmal Hafeez  

SME help in the economic development of a nation. This economic development can be done in terms of creating jobs and creating gross domestic product. They also help in stabilizing the national economy in emerging countries. SMEs in developing economies deal with cumulative intricacies. These SME’s also fail to perform due to the gap in internal resources. Smaller firms are found to be less well-organized than large firms in allocating resources and utilizing these resources (Husin, & Ibrahim, 2014).

Previous studies have confirmed that the SME are involved in the outsourcing accounting functions to professional accountants in current years. In addition to this, most of the research has been done in developing countries. Hence researchers were of the opinion that there is a requirement of accounting outsourcing practices in small firms. Some of these researchers have also recognized that the AO practices in small and medium enterprises have not been given enough attention. These accounting practices have been majorly neglected. (Kumari, et al., 2015).

The study will explore the intensity of small and medium enterprises to outsource management accounting tasks. These outsourcing management tasks focuses on both TCE and RBV prospective. In the above scenario. there is an examination of between the intensity of outsourcing and five independent variables. These independent variables include the likes of regularity of non-routine tasks, the specificity of assets, resourcefulness, accountant trust and rivalry.  The idea of outsourcing was first developed in the end period of 1980. Outsourcing refers to an external service that is provided by a supplier to a firm. The management AO on the other hand is a method that involves both external accountants. In Pakistan, for example SME’s may acquire outsourcing services pertaining to external accountant. The external accountant is providing accounting services such as advisory services and auditing services (Banham & He, 2014).

TCE theory has been established into a valuable framework. This framework might explain why many small and medium scale enterprises performs in house management accountant tasks  . The other enterprises approach professional accountants who have the capacity to reduce the cost of transaction. The outsourcing decision rests on the comparative transaction cost .  This comparative cost will help in availing that service. RBV is a theory-based approach that focuses on production and competences. These attributes are related to achieving competitive benefit and performance. The TCE primarily focuses on governance. On the basis of arguments that are discussed above both TCE and RBV are complementary that I s involved in outsourcing choice.

This study inspects the significant factors that affect the outsourcing decision of the firm as prescribed by TCE and RBV theoretical concepts that are involved in the context of the Pakistan economy. There have been comparable studies that have been conducted in dissimilar setting in established countries. This paper has been supporting three predictions of TSE and one prediction of RBV. This finding has provided growing evidence for the opportunism prediction of TCE. This prediction indicates that greater the level of alleged opportunism, the less likely it is for the owners of SME to prefer outsource purposes. This finding seems to be in position with a previous research that has been done earlier. The several types of the observations have provided support for the competition prediction of RBV. The results of this study have shown that the competition is positively associated with AO. This present study conducted in Pakistan has been able to highlight the importance of the theory of RBV. It also highlights the application of that theory in a new background of the economy. The second sample of the above-mentioned study consisted of SME. However, the research that was developed earlier had its focus on micro and small enterprises.  These findings give an indication that the owners and managers are eager to use exterior accountants. They are only eager to employ the services of outward accountants when the concerned company has various diverse market sections, customers and products (Barbera, & Hasso, 2013). This is the reason why the small and medium enterprises outsource their management accounting functions. They outsource their accounting functions so that they could be more viable and efficient in the market.

Conclusion

The assertions from the secondary sources of the study have stated role of accounting outsourcing on profitability and Outsourcing performance is a great way to achieve high performance in terms of impacting effectiveness and seeking cost savings in terms of both profitability and performance. When business process outsourcing was first introduced, it was only used in manufacturing companies. However, having an enormous development in technology, the process of outsourcing has become a wider and bigger process. The relation of AO and its impact on the assembly of organizational. Different types of Accounting outsourcing services are seen to be evident with several types of small and medium businesses enterprises who may need assistance of accounting professionals for having a more competitive edge to the business. The main issues encountered in such a service is considered with possibility of technical problems. TCE theory is seen to be designed in such a manner that it is able to explain the rationale for the SMEs to conduct MA tasks, while the other companies are seen to be involved in opting for professional accountant who are able to assist in minimizing the overall transaction cost.

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