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There are various issues involved in Finance and Accounts Outsourcing. This article aims at compiling of the issues involved and their solution. a) Network security • Bringing the data on network can have increased risk of eavesdropping and compromising on confidentiality.
• However controls can be placed by using specialized applications which do not disclose the client name to the data entry operator. The same has been implemented for tax return preparation software.
• Solution to these problems have been by :
» Secure Data Facilities (Secure data center)
» Private Networks
» Firewalls
» Data encryption.
• Infrastructure Requirement would be:
» Dual-monitor workstations
» High internet connectivity
» Backup internet connection
» UPS with backup generators for 100% power backup
» Secure data servers with scheduled backup plans
» Dedicated full time or part time accountants
» Licensed versions of accounting software’s
• The Software's which have to be used for remote Access of the Client’s Computer are:
» go to my PC
» Citrix
» RDP
» VPN b) Knowledge expertise • Accountants have specialized knowledge of certain definite national laws and regulations.
• However the knowledge can be eventually be gained and the gap can be reduced by obtaining foreign certifications.
• For a job to be outsource able, following factors needs to be considered:
• When there is no face-to-face interaction,
• A high level of information is used in the job,
• Work involves processes which can easily be structured around the internet and/or telecommunication systems c) Legal requirements • SOX and other regulations have stringent requirements for outsourcing of accounts related work.
• Complications arise due to working in multiple nations and follow of many international laws.
• There are restrictions placed by PIPDEA in Canada, EU Data Protection Directive and German GDPDU
• Review of the work by the signing CPA is compulsory.
• Registration in India with DoT(Department of Telecommunications)
» BPO/KPO/Domestic & International Call Centers/NOC etc. are covered under the ‘Other Service Provider’ (OSP) Category by the Department of Telecommunications.
» The companies who are providing the 'Applications Services’ means providing services like tele-banking, tele-medicine,tele-education, tele-trading, e-commerce, call centre, network operation centre and other IT Enabled Services, by using Telecom Resources provided by Authorized Telecom Service Providers. d) Professional and ethical conduct of accountants • Local regulations of the CPA’s govern the professional and ethical conduct of the accountants.
• Ethics Rule 102, Integrity and Objectivity, requires that “prior to sharing confidential client information with the service provider, a member inform the client, preferably in writing, that he or she may be using a third-party service provider when providing professional services to the client.”
• The Ethics rules prohibits a U.S. tax return preparer from disclosing the taxpayer’s social security number, and requires the tax return preparer to mask the taxpayer’s social security number before the tax return information is disclosed to a third-party outside of the U.S.
• These regulations can be of a particular help in preventing abuse of information.
• For the accountants it is a matter of concern whether clients should be notified that work is not only being outsourced but offshore outsourced as well. e) Managing Cultural Diversities and knowledge of International Laws • Staff should be trained in order to manage cultural diversities.
• Needs to be updated on the international laws. Various international subscriptions can be used for the purpose of update. Conclusion: There are gamut of issues involved in F&A outsourcing however all of them can be addressed by proper measures .Addressing such challenges successfully can convert into a lucrative business opportunity for all the parties involved in outsourcing contract.
Related Articles -
Finance and Accounts Outsourcing, Challenges involved in Accounts Outsourcing, Confidentiality issues in accounts outsourcing,
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