Offshoring has been a popular trend for Accounting Firms and CPAs especially in Australia over the past few decades. It is a popular way for the firms to reduce costs while getting access to the same or even higher quality of services including the ability to expand and experience globalization. However, offshoring also presents certain challenges, such as language barriers, cultural differences, and time zone differences. In this series of blogs, we will explore the ins and outs of offshoring, including the benefits and challenges, the best practices for successful offshoring, The legal implications from Australia and how to choose the right offshore partner for your business needs. Whether you are considering offshoring or are already engaged in it, we aim to provide you with valuable insights and tips to make the most out of this business strategy.
Blog 1: Factors to Weigh before the Big move
Offshoring has always been an attractive path for Accounting and CPA firms due to its unmatched advantages. However, it is not a decision to be taken lightly. There are many factors to consider and weigh carefully before making the big move. From legal and regulatory compliance to cultural differences and market conditions, there are many angles to assess to ensure a successful offshore accounting operation. Here we will explore some of the key factors that firms should consider before taking the plunge into offshore accounting.
1) Cost Savings vs Quality of Service
The quality of service by Offshore Service Providers can vary widely, depending on factors such as the skills and training of their staff, the technology and infrastructure available, and the regulatory environment. The firms must carefully assess the capabilities of potential offshore partners to ensure that the quality of service meets their standards and requirements, they should also consider the potential risks and costs associated with any quality issues that may arise, such as errors, delays, or reputational damage. Ultimately, they need to weigh the potential cost savings against the quality of service they can expect from offshore service provider, and make a decision that balances both factors appropriately.
2) Security and Data Privacy
Confidential financial data is at the heart of the accounting profession, and the sensitive nature of this data requires that it be handled with the utmost care and protection. The firms must take a proactive approach to security and data privacy when engaging in offshore accounting. By carefully assessing potential offshore partners and ensuring that appropriate security measures and data privacy controls are in place, they can mitigate the risks and ensure that their confidential financial data is kept safe and secure.
3) Cultural and Language Differences
Language barriers can also present challenges, particularly when dealing with complex financial concepts and terminology. The firms need to ensure that their offshore partners have a strong command of the relevant language and can communicate effectively in both written and oral forms. To address these challenges, The firms should take steps to bridge the cultural and language gap. This can include establishing clear communication protocols and expectations, and ensuring that communication channels are open and accessible. Accounting and CPA firms can also leverage technology to overcome these challenges. They should use video conferencing and collaboration tools to facilitate real-time communication and collaboration.
4) Scalability
Accounting and CPA Firms should analyse how their access to a wider pool of talent and expertise will enable them to offer a broader range of services to their clients. Generally, with an offshore team in place, firms can expand their capacity to take on more clients, handle higher volumes of work, and take advantage of new business opportunities. Furthermore, offshore accounting allows Australian firms to operate even in odd hours, proving to be a game-changer for the firms utilizing the Offshoring potential.
Legal obligations and Implications of the above factors
There are also many important Legal Obligations and Implications towards their clients and the Australian Government that firms need to be aware of and should be adhering to, for mitigating any associated risks before engaging in Offshoring.
- Compliance with Australian law: Australian accounting and CPA firms are still required to comply with Australian laws and regulations, even if they are outsourcing their accounting services offshore. This includes compliance with the Australian Authorities along with consequences if not adhered to.
- TPB(PN) 2/2018 is a publication by the Tax Practitioners Board (TPB) which outlines the obligations of registered tax practitioners when outsourcing or offshoring tax services, including maintaining confidentiality and ensuring that the services provided to end clients meet the required standards of quality while maintaining high standards of professionalism and ethical conduct and failure to comply of which may result in consequences such as disciplinary action by the TPB, loss of registration as a tax practitioner, or legal action by clients or regulatory bodies.
- TPB(PN) 1/2017 is a publication by the Tax Practitioners Board (TPB) which outlines the obligations of registered tax practitioners when using cloud computing, including ensuring that they maintain confidentiality and security of end client information and implementing appropriate policies and procedures to manage the risks by complying with the relevant legislative and regulatory requirements failure to comply of which may result in consequences such as disciplinary action by the TPB, loss of registration as a tax practitioner, or legal action by clients or regulatory bodies.
- TPB(I) 21/2014 is an information sheet issued by the Tax Practitioners Board (TPB) which outlines the obligations of registered tax practitioners to maintain the confidentiality of client information, including taking reasonable steps to protect the privacy and confidentiality of client information, obtaining client consent to disclose information, and not using or disclosing client information for personal gain or to the detriment of the client.
- Guidance Note GN 30 is issued by the Tax Practitioners Board (TPB) The Guidance Note explains that registered agents must ensure that outsourced services are provided in accordance with the same professional and ethical standards as they would provide themselves. The TPB expects that the registered agent will take reasonable steps to ensure that the third-party provider is competent, reliable, and trustworthy. The registered agent must also ensure that the third-party provider complies with relevant laws, regulations, and professional standards. It also provides examples of outsourcing arrangements that may be acceptable and those that may be unacceptable.
- The Guide to Securing Personal Information is a publication by the Office of the Australian Information Commissioner (OAIC) it outlines the key steps that businesses and organisations should take to ensure that personal information is secure, including the need to implement appropriate security measures to protect against cyber threats, to restrict access to personal information to authorised individuals, and to ensure that personal information is only used and disclosed for the purposes for which it was collected and to avoid misuse, unwanted interference, loss unauthorized access, modification or disclosure of data.
- The Guide to Australian Privacy Principle Guidelines is a publication by the Office of the Australian Information Commissioner (OAIC) it outlines the 13 APPs and provides detailed guidance on how to apply them in practice, including the collection, use, and disclosure of personal information, as well as access, correction, and complaint handling. By following the guidance provided, businesses and organisations can ensure that they are complying with the APPs and protecting the personal information of individuals in accordance with the law.
In conclusion, understanding the dos and don’ts is crucial for both accounting and CPA firms, as well as offshore service providers, to ensure a seamless experience for their clients. By adhering to highest of standards, maintaining transparency, and keeping up-to-date with the latest industry trends and regulations, we push on establishing a solid reputation and build long-term relationships with our clients. We believe in staying informed and adaptable is the key to our success in the fast-paced and ever-changing world of Australian accounting & Tax.
Stay tuned for more such informative blogs in our “Offshoring 101” series.
Are you an Accounting/CPA/Bookkeeping firm looking to offshore accounting and taxation services? Contact us Now.!
Further Information and References:
- Tax Practitioners Board:
https://www.tpb.gov.au/tpbpn-22018-outsourcing-and-offshoring-tax-services-code-professional-conduct-considerations,
https://www.tpb.gov.au/tpbpn-012017-cloud-computing-and-code-professional-conduct, https://www.tpb.gov.au/confidentiality-client-information-information-sheet-tpbi-212014,
https://apesb.org.au/uploads/standards/guidance_notes/29102015070709_Revised_APES_GN_30_Oct_2015.pdf - Office of the Australian Information Commissioner (OAIC):
https://www.oaic.gov.au/privacy/guidance-and-advice/guide-to-securing-personal-information/,
https://www.oaic.gov.au/privacy/australian-privacy-principles-guidelines
