Accountants advised to declare on outsourcing

Accounting firms who outsource services will need to reveal not only the fact that they are using such services but where the company undertaking the outsourcing is located, according to new guidance from the Accounting Professional and Ethical Standards Board (APESB). 

The ruling, handed down late last week, is contained with APES Guidance Note 30, which it said had been developed as a result of “the rapid growth of outsourcing professional services”. 

The guidance note not only makes clear that the use of outsourcing services does not absolve accountants from meeting their APESB requirements, but also requires them to reveal to clients the nature of the outsourcing arrangement. 

“Where a Member in Public Practice utilises Outsourced Services, the Member should disclose to the client the geographical location of the Outsourced Service Provider and the nature and extent to which Outsourced Services are used in the delivery of the Professional Services to the client,” the guidance note said. 

“These factors impact the amount of risk associated with the Outsourced Service being delivered and the management of the confidential information of the Client,” it said. 

“Where a Firm uses Outsourcing on a regular basis with a multitude of clients, a standard form of disclosure may be used by the firm,” the APESB guidance said. 

Commenting on the new guidance, APESB Chair, Kate Spargo, said that while outsourcing could have benefits such as staff utilisation on core activities, lower costs and access to specialised skills, it also had potential risks. 

“Areas such as disclosure to clients, confidentiality of client information, integrity of information transferred between professional accountants and the outsourced service provider, and control and supervision of the work performed are areas addressed in the guidance note,” she said.