Outsourcing in accounting and finance refers to the contracting of independent entities to perform accounting and transactional activities that otherwise would be performed by in-house staff. Outsourced activities and functions within the realm of accounting and finance can run the gamut from relatively unsophisticated operations to highly complex processes (Michael, 2008). There are benefits that are associated with the outsourcing of finance and accounting activities, not the least of which are lower costs. There also are risks involved; however, as the ultimate accountability and the responsibility for the quality, legality, and ethical character of the output remains with the company, not with the outsourced contracting entity (Duganier, 2005).
With respect to the quality, legality, and ethical character of financial and accounting records, reports, transactions, and other outputs, the situation becomes even more complicated for globally operating companies. Such companies must assure that the operations, records, data security, reports, and all other aspects of the financial and accounting functions conform to the standards that are applicable in (a) the home country of the company and (b) the host countries within which the company operates (Heffes, 2008). Such standards likely will include the following:
> International Financial Reporting Standards (IFRS), as these standards apply in various countries
> Generally Accepted Accounting Procedures (GAAP) that may be specific to various countries
> Other public company laws and regulations, such as the Sarbanes-Oxley Act of 2002 in the United States
As noted above, the ultimate accountability and the responsibility for the quality, legality, and ethical character of the output remains with the company, not with the outsourced contracting entity. This dictum does not mean, however, that the outsourced contracting ...