entity is not subject to accountability and responsibility. First, the outsourced contracting entity is answerable to the client organization. Second, the outsourced contracting entity is answerable to the legal and professional bodies that govern their operations (Seelig & Freeman, 2008). Thus, contractors cannot collude with client organizations and hopes to escape punishment.
While both risks and rewards are associated with finance and accounting outsourcing, one should bear in mind that the underlying concept is not novel. When a public company engages an independent auditor to prepare a set of certified financial reports, the company is adhering to law. When the public company also contracts with the independent auditor to prepare income tax returns however, this action is not a legal requirement. The company could prepare its own tax return. When a company files an income tax return prepared by an independent auditor, however, the ultimate responsibility for its accuracy, truthfulness, and completeness resets with the company, not the independent auditor. As indicated in the preceding discussion, however, the independent auditor is responsible to the regulatory and professional organizations that govern its operations.
IFRS, GAAP, Governance, and Sarbanes-Oxley
This section of this paper explores and examines issues that are relevant to the contracting out (or outsourcing) of finance and accounting functions and transactions by global public companies. These issues are discussed from two perspectives. The first perspective is that of the management of global companies that outsource finance and accounting functions and transactions. The second perspective is that of the outsourced contracting entity.
The IFRS structure is a component of the International Accounting Standards (IAS) regime. GAAP, in contrast to IFRS, are country-specific. In each case, however, the standards reflect the underlyi...