Government’s proposal for Making Tax Digital (MTD) has received a widespread criticism, yet the political and business groups have agreed that online is the only way for taxation to go forward. Currently it seems that the new legislation is going to arrive either the next year or in 2020 and all the businesses will have to adapt to the changes it brings.
What is Making Tax Digital or MTD?
Making Tax Digital (MTD) is an HMRC initiative that will revolutionize the UK tax system and ultimately bring an end to self-assessment tax. It is matter of time that the changes in the legislation come into effect, it is speculated that by April 2019 it is going to be applied. When the changes come, most of the businesses will have to submit the quarterly online tax returns through software which will be approved by hmrc self-assessment. All these updates are going to be followed by end-of-year reconciliation to make sure activities for the whole year have been recorded properly for taxation. As we came to know from the taxman, following changes will be achieved:
The government has consulted on these proposals the last year and has also said that they are going to respond very soon to the consultation. Last year HMRC has published the draft Finance Bill which includes the clauses for necessary changes to be legislated.
Commons Treasury Committee has stated that the small firms could be spelled with disaster with the radical plans and they also feared that many outsourcing accounting for small business firms may face the out of business situation.
Though the Committee well supports the idea of reporting of the tax being digitized, it also stresses that there is no proof that the quarterly reporting and record keeping through mandatory digitization can be beneficial and that there should be a detailed set of pilot systems before it becomes obligatory for every business.
Committee is also concerned about the economic (cost) impact of introducing and maintaining MTD on small businesses as the information about the free software which will help to submit taxes is not sufficient still now. Committee feels that all these extra costs are going to surpass the benefits to exchequer in tax gap reduction terms as the result of few taxpayer errors leading to MTD’s overall impact being negative.
In response to the conclusion of a report regarding MTD, Committee Chairman, Andrew Tyrie has said that if the digitization of tax records and the reporting i.e. MTD can be introduced carefully then it can make a great opportunity to improve tax system administration for long term. But without careful approach, MTD could be disastrous. He also said that if it is implemented with proper care where it is necessary along with the arrangements that are long transitional and that it gets full information from inclusive pilots, then Making Tax Digital can be beneficial both for the tax yield and the economy. According to Andrew if it is introduced in a rush then it is not going to benefit the system.
Recommendations by the Treasury Committee:
It is to be seen whether the Government is likely to take note of Committee’s recommendations and all the related concerns and the suggestions which are voiced by bodies like the Institute of Chartered Accountants in England and Wales or ICAEW and the Chartered Institution of Taxation.
Though, one thing is certain that Making Tax Digital (MTD) is going to be placed in the legislation system in a very short space of time.
Mostly those business with exceeding taxable turnover then the threshold of VAT registration will have to keep their records digitally using the compatible software for MTD functioning and then create VAT return from the software or combination of software; mostly for return periods.
Some of the challenges business and their advisers going to face due to MTD are:
Right now, it is hard to predict the exact timing of the implementation and the total impact of MTD on businesses, but one thing is for certain, it will lead to more work for the accountants. Accountants will have to deal with not only more inquiries but make sure that all their existing customers are fully complied with MTD. Accountants may have to find innovative ways to deal with such deluge of work.
BY: AMIT AGARWAL
Suite 7, First Floor, Amba House,
15 College Road, Harrow
Middlesex - HA1 1BA
Registration No: 10746177
+44 (0) 330 057 8597
Unit No.110-111, Spaze IT Park,
Tower b4, Sohna Road,
Gurugram, Haryana - 122001
Accounting may not be a key skill for you, or you don’t want to focus on anything else other than your core business or simply want to cut down cost – the reason for outsourcing your accounting services could be many and is a good move. You just need to be sure you have thought through the checklist well, before finalizing the vendor. Very basic, though there are points that get missed by many companies while outsourcing their accounting, resulting in a failure. Here are some common ones.
GDPR – is your accounting OSP following this?
Accountants have access to a lot of data on a daily basis. The accountancy outsourcing provider needs to be sure that their processes and systems are robust to comply with the GDPR. The required audit and checks should be in place to ensure there are no loopholes in the compliance. So, before you move ahead on further discussions with your vendor, the first thing should be to check their GDPR audit reports.
Missing on your homework
Your final goal, objective for outsourcing accounting and key criteria to choose the Accountant outsourcing provider should be clear, documented and well researched. Researched – to be sure that the goal you are setting will be achieved by your objective of outsourcing your accounting or bookkeeping company in uk and the vendor criteria you are defining is being met by your shortlisted vendors. At each level, you should be evaluating multiple options, even when you are doing your final negotiations with the vendor. Keep doing your homework to be able to present your case better and be sure the accounting OSP (outsourcing service provider) you are choosing is the right one.
Defining ‘Cost’ the decision point
It is fine to keep ‘cost of the services’ as one of the evaluations criteria but making it the decision point isn’t a smart choice at all. While most of the companies wouldn’t keep it on the list, but they end up choosing the vendor on ‘a comparative lower cost’. It is important to have the exact services you will be getting for the amount in black and white. A lower cost will always mean a few excluded services or a compromise on quality or the OSP’s experience. For example – you may not get some add on services or may be dealing with a junior resource which will eat up more of your time. So, while you are saving a little amount, you may be spending more of your quality time in return. Hence be sure to know what your will for a lower price and decide based on the services and experience rather than the cost.
Choosing a ‘Lift & Shift’ model
You want to outsource accounting either as you don’t have skills, or you want to cut down cost on this non-core skill. To be sure you get the right skilled people working for you at the right price it is important to know your accounting outsourcing service provider’s expertise. What type of associates and what skilled will be managing your accounting should be your question.
You don’t want to become part of a lift and shift model which shifts all your accounting services to an offshore location to help you cut cost however not necessarily these outsourced locations will have people trained to be able to manage accounting for you without errors. So, your team ends up managing them indirectly making them spend their quality time on it anyway.
Trust the documentation, Not words
When outsourcing, the access to data is no longer restricted to only company employees and the vendor’s employees will be able to view the same. Storing and processing of sensitive data, and protection of proprietary information becomes challenging. Every OSP will tell you they will ensure data security, but breaches happen. Don’t they?
As a client you need to dig deeper to understand the exact processes they follow to ensure data security and confidentially. Have the process documented, involve your IT security guy and ask the OSP to make tweaks to incorporate the suggestions. Know the implemented security controls and protocols for data security and put them as part of the legal and contractual agreements.
Mis-alignment of Requirements
Outsourcing Accounting or self-assessment tax return is a serious decision and all checks need to be in place before deciding the vendor. It is essential that you align your requirements with the partner vendor’s capabilities. Issues arising because of legal and contractual agreements not being comprehensive can cost your company more time and money. It is also important to agree on the tracking and evaluation mechanism beforehand so that the performance and errors can be checked at the right time.
BY: AMIT AGARWAL
Suite 7, First Floor, Amba House,
15 College Road, Harrow
Middlesex - HA1 1BA
Registration No: 10746177
Ph: +44 (0) 330 057 8597
Unit No.110-111, Spaze IT Park, Tower b4,
Sohna Road, Gurugram,
Haryana - 122001
For people from the non-commercial background, it is very difficult to define the difference between an Accountant and Bookkeeper. Generally, both the line of work is admixed together.
Here, bookkeepers stand as troopers of the army at the very initial level. All the accounting activities are commenced by them.
While Accountant’s work is analytical and advisory in some manner and it also based on outsourced bookkeeping services activities.
On the other hand, role of bookkeepers and accountants are equally significant when it comes to precisely proclaiming financial activities and overall performance of the business. As a result, demand for such professionals is increasing in business organizations throughout the world.
For better understanding of both the activities let us have glance on the simple definition of accounting and bookkeeping services –
It is a daily activity of recording financial data relevant to business operations in a regular manner. Bookkeeping is the activity of classifying, recording and analyzing business transactions in the pre-determined professional format.
It is a process of identifying, measuring, and communicating financial information to entitle certain judgments and decisions by the users of the information. Accounting is considered as the activity of informing to other about the economic position of the firm.
Now it may be clear that what exactly both the activities are about. Let us further discuss some of the main functions performed by Bookkeepers and Accountants-
The following functions are key components to assemble a strong organization. These are the major activities performed by Bookkeepers:
As we shared before, accountant’s work is more analytical, calculative and advisory in nature and it overlaps many of the above-mentioned expert activities in some manner.
As their work defines their activities they can not only help in general accounting activities, but they tend to analyze past performance and draw financial projections for your business and guide you through future financial activities to be performed for healthy business operations.
Services performed by accountants includes:
This was just a short glance of works performed by Bookkeepers and Accountants, but in reality, it is a huge arena with lots of complex and complicated task to be performed.
Now let’s see the heart of this article. Yeah, its 6 major difference between the Bookkeeper and Accountant:
On the basis of purpose
On the basis of management role
On the basis of Tools
On the basis of decision empowerment
On the basis of skills
Hence, the conversation about differentiating Bookkeepers with Accountants could not be ended because it’s a huge battlefield. The Most of the companies are confused which designation to be choose between them. But while choosing any of them the company should review the difference between their functions and activities. Whichever designation fits the requirements of the company should be selected. Most of the time companies opt for Bookkeepers and get outsourced the accounting work from other CPA institutes for financial decisions. This is the more cost effective and convenient way of getting accounting information updated.
BY: AJEET AGARWAL
In recent times we have witnessed significant number of people parting their ways with the job and taking their own route to achieve something on their own. The people with firm determination and sheer dedication have come forward to make the world a better place.
Whether you belong to the creed of the initiator or founder of an established business, all of you tend to miss on one point for sure, which is an effective allocation of responsibility. Yes, you heard it right. Many a time, we tend to assume that we can shoulder some responsibility like accounting and bookkeeping services, which we never took up before. We consume our most vital time in undertaking some tasks which would have been executed by a relevant expert in considerably less time.
That’s where the bookkeeping outsourcing company world comes down to rescue your business. Nowadays, every other service is getting outsourced thanks to high-speed internet and cloud services. Be it engineering, marketing, IT or Accounting, all of them are being sent overseas at relatively better quality and lower price.
The common misconception that prevails amongst the entrepreneurs is that tasks like tracking the finance should be done by the employee of the company. And executing that way, they spend huge resources initially to find the right employee and then to continuously motivate them and keep them with the company. At the same time additional resources are spent to provide training and keeping their skills up to date.
When you are just commencing the business, you need to realize that instead of undertaking it in-house, you can get it done by the firm which has dedicated experts and tools. Especially when we talk about small business, that’s the place where you can save humongous time, effort and of course, cost as well.
Following are the 5 ways in which outsourced accounting can help small businesses transform their businesses
Availability of elite team:
Outsourcing accounting companies companies create a pool of large resources with some very specific and niche skills sets to provide services to their customers. They don’t rely on people with generic skills sets as they are able to use these very highly skilled people across number of different accounts and hence are able to afford them. On the other hand, inhouse accounting team invariably will have to rely on generic skill sets as it is virtually impossible to hire a separate staff for all the niche requirements.
Open to advanced accounting systems
Being a small business, it becomes very difficult for you to use high standard accounting software to fulfil the needs. However, when you choose to outsource the work to specialist firms, you gain the access to all those mighty bookkeeping and accounting systems. This would not have been possible otherwise. That’s the beauty of the outsourcing alternatives you get at considerably less cost.
Saves from payroll problems
Often, payroll service providers in uk we tend to hire people who eventually prove inefficient in doing the allocated tasks and we must bear with it due to employment norms. Both finding people with the right skills and getting rid of people with not the right skills is hugely time consuming and complicated tasks. This can be avoided at least for accounting related tasks if you were to choose outsourced provider.
Going to the outsourcing accounting company with the references from your friend or business associates can be more reliable than any other source. Find out what accounting firms they go with and what they recommend you for your business.
Boost the effectiveness
Saving on costs by through outsourcing is only the tip of the iceberg as some of the real benefits are realised after few months in form of better quality and the speed with which work is delivered. This will help you deliver better customer satisfaction/experience to your customers leading to more repeat work and hence better stickiness.
Efficient Budget Management
The overheads in any business are only going up these days, hence when you give the key to drive your accounting work outside the company, you are cutting one overhead less. It gives you time to spend your energy to win work for the company which is far more important to its growth. When your business is in growing phase, it takes the efficiency of your business to next level. And, justify the execution of bookkeeping tasks in accordance.
All in all, accounting and bookkeeping companies prove enormously beneficial for your business, regardless of the sector, you’re dealing in.
Contact us today for a review of your business accounting practices
BY: AJEET AGARWAL
The economist, Adam Smith, says in his treatise The Wealth of Nations, “If a foreign country can supply us with a commodity cheaper than we ourselves can make it, it is better to buy it of them.” Outsourcing is merely a progression of an idea that has existed since early days of trade where people would travel far east or west for food and art that was available in plenty in these locations. It initially started with physical goods and now we have progressed that to include services (luckily in this internet age we don’t have to travel to that specific place to buy these things.
As companies grow, it becomes increasingly clear that their focus has to be redirected to their core activities while the non-core functions can be ‘sent out’ or ‘outsourced’ to vendors specialized in that particular function. If there is anything that can be done more economically, effectively and efficiently by the other party than the organisation itself, then it is classified as non-core
Based on years of experience with outsourced accounting firms, we have identified some key reasons for which companies around the world prefer to outsource work. Following image gives an overview of that.
Focus on core functions
Companies that outsource certain routine functions to offshore experts can focus on their core competency. Before outsourcing caught on in such a big way, healthcare practices had to deal with functions like transcription, medical billing and claims processing which consumed a lot of their time and resources. However, now by outsourcing these processes to external locations these practices can focus on their primary concern – ‘patient care’.
Conversion from fixed to variable costs
Companies that decide to outsource find that expensive infrastructure requirements are cut back drastically as some of the functions move to external locations. Cutting edge IT systems, state-of-the-art customer service call centres and technical support entail heavy investments to companies. By outsourcing these functions to external vendors, companies can convert these from very high fixed costs to manageable variable/flexible costs which can go up and down based on their requirements
Ability to scale ( overcome talent shortages )
One of the key reasons why outsourcing has become a necessity is the shortage of talent in developed nations. As the previous generation of workers approach retirement, there are precious few newcomers coming in to fill the skills pipeline. The obvious outcome of this acute talent shortage is an increased demand for skills wherever they may be available. Industries are also subjected to seasonal fluctuations in work and lack of workers during holidays and off-seasons. One of the advantages of outsourcing such processes to countries like India and Philippines is that companies can deal with peak workloads and poor staff strength during vacations and holidays.
Access to best talent, technology & methodology
Apart from the financial benefits associated, another reason why companies outsource work is to have processes delivered by teams that have operational expertise in the outsourced process. As outsourcing has picked up over the years, several nations have built up incredible skills sets and capabilities in specific work categories. As these jobs are highly valued in these countries, some of the best people come and work in this line of business. Hence outsourcing gives companies access to world-class capabilities and infrastructure in the outsourced function.
Incredible value for money – helps reduce cost and operational performance
One of the most talked about advantages of outsourcing to locations like India is the cheap labour costs in these countries. Processes outsourced to these locations are done at much cheaper rates and same quality levels as in the donor location. This translates into major cost savings for companies. They also save on operational costs such as payroll, administrative costs, HR, power, rentals and utilities as processes move to other locations. Companies outsource to vendors who have domain expertise in the outsourced process. Their experience in the field translates into greater operational efficiencies for the bookkeeping outsourcing company in uk. Their skilled expertise will produce better results within a faster turnaround time and thereby increase your turnaround time to your customer. On time deliveries result in happier customers.
Overall its not very hard to see why outsourcing is so popular and why more and more companies are choosing to outsource. Industry watchers predict that outsourcing as a business practice is on a growth mode. More and more companies are drawing up plans to outsource work to offshore locations. The trend is clearly in favour of outsourcing larger volumes of work. Vendors are moving up the value chain to include in their service offering a range of additional services that require greater skills, research support and expertise. As offshore vendors become more streamlined and improvise on the offshore outsourcing model, it is not difficult to see why outsourcing is here to stay
Outsource your accounts today and lower your operational costs by getting in touch with us
Ever since the trading started, accounting has been the backbone of any business to enable the growth and stability of it. Accounting concepts and basics may not have changed much with debit and credit being the most important notations, nevertheless how we keep our books (accounting) has constantly changed with new regulatory changes and people’s ingenuity to continually make things more complicated. In the past 50 years though, only change we have seen in accounting at a large scale is moving from paper-based books to soft books using technology. These days due to ever changing business environment, a robust technology driven accounting system is the prerequisite for any accountancy firms. However, the change to cloud based accounting system is still happening very slowly. I believe this industry has been slowest to transform and imbibe change is due to the very nature of it that is money. This industry is like the gatekeepers of the lifeline of any business and hence very risk averse. Having said that I also believe that we are going to see some rapid change in the industry because of some phenomenal changes in the technology and need to provide better service to the customers. Following are some of the key trends in the industry
One Stop Shop
Customers who come to accountants today don’t want to just get their books done but also get some valuable advice from their accountants on variety of their financial needs ranging from tax, financing, mortgage, investments, pension, payroll services etc. Sole traders, self-employed, contractors and small businesses all want their accountants to deliver these services and yet the lowest cost possible. I think we will see emergence of Accountants advisors who will not only do books but also help their customers with their other tertiary needs.
With the advent of massive cloud infrastructure and accountants need to be able to access their data anytime, anywhere, accounting firms will slowly move towards accounting system on cloud. This will not only help them provide better service but also help them reduce their operating cost.
The benefits of cloud accounting include:
Automation of accounting services to a virtual accountant has saved accounting firms a lot of time. Automation is gradually eradicating the demand for manual data entry which in-turn is saving accounting firms cost and time. Accounting automation is intended to decrease the load of manual accounting and outsourced bookkeeping services. Few people think that automation in accounting might seem like a menace for accountants, however, this is not true – automation is unlikely to replace accountants rather make it tremendously advantageous for small-business owners and entrepreneurs
Lot of people think if we can automate, why outsource. The fact is there are numerous studies that state that in most likelihood, automation will not remove jobs but change them by making them more productive. The fact is we would still need people to not only check for quality but also complete the books and analyse the data. Outsourcing of back ended jobs will continue to help accountants focus on customer service and growth. In all likelihood, outsourcing is expected to increase as competition bites the industry due to automation. Small practices that are unable to invest in automation will have to outsource even more heavily to remain competitive and relevant.
Outsourcing will continue to provide:
In the recent past, collaborative accounting had evolved and now accountants and clients can use collaborative accounting to work collectively in real-time irrespective of their location. Let’s understand this with an example: Now with technology driven collaborative accounting, accountants can view and make changes to their clients’ information for anywhere using cloud-based accounting software and interconnect with clients using collaborative tools such as HipChat and Slack. All that is needed to perform the task is incorporation of technology, portals, and tools, to carry out flow of information between the collaborators
Adopt the latest trend of Outsourcing accounts with a more reliable offshore accounting team today.
BY: AMIT AGARWAL
As the digital transformation juggernaut moves along, subsuming all workflows and processes globally, it would be illogical to expect accounting to be spared the transformation. Yes, the effects of this transformation are seen in accounting, as in other functional areas. As a General-Purpose Technology , IT has impacted all processes either directly or indirectly, ushering in change, and leaving no domain untouched. What emerges from this accretion of sorts is a simple fact – it makes more sense to outsource bookkeeping outsourcing company. By virtue of being specialist in nature, these services can only be offered by qualified, certified and experienced professionals. Though a need for a separate accounting department will be necessary for unicorns or large organizations, accountants within organizations will certainly find it easier to outsource tasks and take advantage of the accounting technology dimension that has transformed outsourced accounting firms into a better option.
The four key areas that will see changes
The future of accounting will certainly revolve around four aspects, primarily related to the nature of the job, the use of technology, the need for outsourcing, and advisory services. And what is certainly not going to happen is the loss of jobs to machines, despite all the brouhaha about AI, Machine learning and new technologies. In this context, there is a single point that needs mention – it is not possible to replace all human roles. While technology will certainly change the roles and bring in automation for greater efficiency and AI assisted decision making, it is hard to foresee machines taking over all roles. Especially when it comes to number crunching and financial transactions. While blockchain as a technology would certainly be a disruptive force, a game changer in accounting, it will certainly be difficult to take the place of a certified, specialist team of accountants, who offer tax advisory services and assist clients in understanding provisions of taxation and exemptions. As a distributed ledger, it will simplify operations and improve compliance, but will still require an accountant to handle other aspects of accounting and taxation.
Job descriptions will change and will certainly not be similar to what they were earlier. Technology driven tasks will demand the accounting profession to hone their skills and blend it with technology for optimum results. A lack of proficiency in advanced applications will certainly be a handicap, and accounting firms that do not embrace technology or upskill resources, will find the going tough. Globally, as standards are brought into place for a more seamless governance, it is only a matter of time before transactions become fully digital. This will then necessitate the use of bookkeeping software, applications and accounting software that are compatible or as per a fixed standard. Accountants in businesses that are not in possession of the resources or budgets necessary, with all the mandatory/required applications and skilled manpower, will find the outsource accounting service route to be the best option. Large companies with high volumes of transactions, with the pockets to afford a separate department will be in a position to maintain the right kind of trained and certified accountants with the necessary software. Here, the search will be for accountants who are highly qualified and certified, for the some reason that other repetitive tasks that require no human intervention will be handled by AI and blockchain.
Technology assisted roles
This aspect more or less overlaps with the roles of accountants and resources as mentioned above. Accounting technology will continue to make inroads into functional areas. As algorithms become more complex, and computing power increases, the technologies that are presently available for accounting will improve to levels that will make compliance, bookkeeping and accounting a lot more streamlined and seamless. A shakeout is certainly on the cards as packages and applications that do not offer the full suite of services will not make the cut. Accounting software that are advanced, future ready, open ended, flexible, user friendly and uncomplicated will find takers, while other mediocre offerings will bite the dust. However, as accounting is a specialized area of activity, the mere possession of software or packages will not render an organization fully prepared to undertake accounting. Far from it, a business that attempts to do so without the necessary fundamental knowledge of accounting and VAT filing and taxation procedure, will find themselves in a fix. Systems and packages need to be in place after the resources are hired, and not the other way round. A presumption of requirements will backfire and result in unwanted CapEx. Five different factors will standout on the accounting technology front.
This will certainly be the preferred option for Accountants in organizations in the face of tighter budgets. Outsourcing as a model has benefitted many back end processes. The accounting profession is a niche domain with a need for specialist resources to handle the operations. A separate department will work out in terms of expenditure only when the size of the organization or the volume of transaction warrants it. Accountants in businesses that do not have voluminous transactions or are very small in size, will look at the outsource accounting services route, relying on bookkeeping software to become compliant and file returns. Technology has smashed the barriers of locations and accountants can actually take advantage of lower costs and specialized services of agencies in different locations. However, as accounting has got a lot to do with local regulations, it would thereafter become necessary to ensure that offshore accounting agencies possess the specialist skills required to ensure compliance with jurisdictional authorities. Accountants in businesses will also look at outsourcing tasks that are of a general or basic nature, when there is not much of compliance involved. For example, data entry can safely be outsourced, provided the software used by the agency has a standard structure.
Advisory services will be one important aspect of accounting services. Regardless of the technology that is used, accounting firms will need to provide insightful advisory services. An experienced and certified accountant will possess the requisite knowledge to understand specific situations of businesses and offer suitable inputs at the right time to help businesses steer themselves to safety. Rather than playing the role of a facilitator for compliance, which is basically an interpretation of laws, the accounting profession in the future, will involve more in matters that require specialist knowledge, while relying on technology to take care of other basic tasks.
As a large number of scams surface, compliance and regulations have been modified and tightened to ensure that companies or businesses do not indulge in practices such as tax evasion. Transactions will be exposed to greater scrutiny and it is therefore necessary for accountants in organizations to ensure that all transactions and compliance remains within the law, by relying on specialist accountant services.
One of the developments that directly impact accounting is communication technology. Advanced communication has transformed the way accounting services are accessed and offered. Accounting services which were once the preserve of large conglomerates, are now available to accountants in firms of all sizes, thanks to the convergence of IT and communications. IT has the potential to deliver results, but can do so only upto a point in the absence of strong communication networks. However, as communication networks delivered IT to all locations, accountants in businesses have greater reason to rely on offshore accounting services. The catch is that while technology has rendered distances redundant, it will not change regulations and compliances. Accountants who rely on offshore accounting firms that operate in distant locations need to ascertain the expertise and professional knowledge, specifically with regard to expertise on local laws.
Accounting is as old as business itself, and has been used from the time the barter system was in practice. Accounting is one of the most important aspects of business, because to put it quite bluntly, one of the main reasons for a business to exist is the monetary aspect. Without the right inflow of funds, other objectives of growing and expansion will hit a wall. Therefore, it is necessary for accountants to ensure that all accounting practices are as per legal requirements and fully compliant, in terms of taxation. The future is promising as accounting will continue to improve with technology driving the accuracy and speed of services.
The astute decision to outsource accounting needs to be followed up with a shrewd choice of accounting firms or individuals. The wrong choice can saddle an accountant in an organization or business with a mismatched or incompetent service that will be of little or no use. An accountant runs the risk of squandering away the advantages of accounting companies by picking on the wrong agency or individual. It is therefore important that an accountant who decides to outsource, spends adequate time and effort in zeroing in on the right agency. Of course, this can be easier said than done, considering the large number of agencies and individuals who offer services. With hardly anything to use as a kind of filter, an accountant may sometimes find it bewildering to home in on the most suitable service provider, and unsure how to proceed. Here is a little cheat sheet that can be used for short listing and choosing the right outsourcing partner from a long list of prospective outsourcing partners.
Compliance with GDPR
This will be something like a bolt from the blue for those who may not have considered this to be a factor to determine suitability of an accountant partner. GDPR, acronym for General Data Protection Regulation will be effective from 25 May 2018. While an accountant in a small business may sometimes regard GDPR as unrelated to operations, it is not exactly so. For instance, if an entity offers services that are used by individuals or agencies within the EU and if transactions involve data of such clients, then it becomes the responsibility of the agency to have safeguards in place to protect the data of the clients. This automatically means that an accountant needs to ensure that his organization and its outsourcing partners are GDPR compliant. If, on the other hand, if the organization does not deal with other third-party data, there will still be a need on the part of the outsourcing partners to be GDPR compliant as the agency will be dealing with the data of the business. While the onus will shift to the accounting firm in this case, it will certainly help to engage a firm that operates fully within the law. A penalty, if and when imposed will have a telling effect on the accounting firm and there are possibilities of fees being hiked marginally to offset the penalty paid. Bottomline – before choosing the right outsourcing partner, GDPR compliance and its implications needs to be fully understood.
Calculations employed for arriving at commercials
The ballpark for hourly accountant fees notwithstanding, it would certainly help to understand how an agency calculates the commercials. And the most important aspect is to understand this beforehand and not after signing up to accounting and bookkeeping services. Typically, the rates would swing anywhere between 75 to 120 pounds per hour for basic services. For value added services the prices will differ and depend entirely on the nature of services sought and the experience and expertise of the specialist in the accounting firm offering the service. An accountant needs to seek and understand the ballpark estimate and work out a rough calculation to arrive at an estimation of the number of hours of service that may be required. And it would pay to opt for the services of an accountant partner firm that is fully transparent. Hidden costs and clauses have a way of cropping up at the last moment. While certain costs are perfectly legal, the crux of the issue is the sharing of such information beforehand. Not only does it help a business in terms of keeping the outflow low, it also helps in building confidence levels with the firm. Bottomline – opt for the services of a firm that spells out every single detail clearly and unambiguously.
Basic accounting services can be outsourced to offshore entities, given the nature of services. Typically, the rates range from around 8 Pounds to 25 Pounds per hour. This works out well for organizations that do not have big budgets and accountants in such organizations looking at cost cutting measures can actually choose offshore entities. However, as mentioned elsewhere what needs to be ascertained is the compliance aspect and the use of software that is as per a standard and structure that is compatible. For instance, it is necessary to maintain records of transaction in a manner that is generally accepted. The offshore accounting service to whom the requirement is outsourced, should therefore undertake the data entry and compilation of data, in the same format as prescribed. This is best achieved by querying about the software used and verifying about the compatibility. Databases that are generated out of data entry may require to be shared in a soft copy format and a compatible database will then become necessary. The rates are no doubt reasonable and attractive, but the output needs to meet the specific requirements.
Technology embracing firms
This is the era of digital natives, and to compete as a business it is important to be tech savvy. This applies not just to the business but to the whole ecosystem in which the business operates. It is therefore important to choose an accountant partner agency that makes use of technology to deliver services. This will ensure that the reports generated are in a format that is easy to understand, in addition to being made available on demand. The technology and platform that is used for delivering the services and performing the accounting functions needs to be the latest. Take for instance, the cloud. Cloud based accounting services offer clients and accounting firms a collaborative dimension, in addition to helping clients seek and receive reports at any time, from any place. Mobility on the other hand is slowly transforming the entire landscape, and it is therefore necessary that the accounting firm offers services that cater to this need. This is one of the most time efficient and convenient methods of working. Bottomline – The chosen outsourcing firm needs to adopt and make full use of technology while delivering services.
High levels of expertise on jurisdictional legislation
This is one of the most important aspects of outsourcing. An outsourcing partner may have the required knowledge in the domain and may be an expert service provider. However, if the accounting service has little or no expertise or exposure to the local regulations and legislation, the whole exercise may turn out to be futile. This needs to be borne in mind especially when choosing the right outsourcing partner from offshore entities. However, it also needs to be added, that there are many entities offshore, that specialize in services for specific localities. For instance, an agency in another nation may have a division that has experts on the regulation and legislation of another nation. Such scenarios exist in accounting firms that have separate divisions, specializing in niche areas. This is more of an caveat emptor on the part of the business partnering with the accounting firm. Bottomline – The chosen accounting firm needs to possess adequate experience and exposure about the requirements that are intrinsic to a particular location where the business operates.
Overall accounting experience
The credentials, certification and experience of the agency or the individuals behind the agency counts a lot. This overall accounting experience will help the stakeholders to steer and direct the others in the team to discharge accounting services in the manner that is necessary. A firm is only as good as its stakeholder. This is relatively simple to ascertain, when compared with other aspects and factors that need to be verified. Qualifications and credentials are aspects that an accounting firm proudly shares with the prospective clients. This requires a careful scrutiny to ascertain suitability. For instance, if an accountant requires basic bookkeeping outsourcing company services and year end accounting services, then there really is no need for a fancy global team of accountants who offer corporate accounting and advisory services. All that will be required is an AAT certified individual in a firm to take up the tasks. Similarly, if the accountant is on the lookout for advanced advisory services, then the need arises for a suitable, experienced, qualified, specialist like an ACCA, CIMA or CTA. Bottomline – Businesses need to strike the fine balance and ensure that there is no overkill or underkill when it comes to choosing a firm.
Facetime for interaction and urgent expert opinion
This is a healthy aspect and will help to nurture good relations which can sometimes help both the accountant and the accounting firm to thrash out issues. A firm that does not offer its clients adequate time for interaction or does not immediately respond to queries is certainly not the very best as an outsourcing partner. It is therefore important to choose a firm that devotes sufficient time and has in place a channel for swift and effective communication. This will be helpful in the event of urgent advice that may be necessary for an accountant who needs to iron out formalities regarding a new agreement or a venture. The compliance aspect and the regulations that need to be considered during all financial transactions require the opinions of specialists. Therefore an accounting firm needs to be in a position to support the client with necessary information and recommendations as and when sought. Bottomline – Choose an accounting firm that has in place a particular channel for communication when the need arises for urgent expert opinion.
Flexible, customized services
The very idea of outsourcing accounting operations to a firm is to take advantage of the expertise of a team of accountants and to avail of the services in a manner that reduces cost without affecting the quality of the services. This is, in essence the very purpose of outsourcing. A chosen firm should ideally offer services that can be customised to meet the specific requirements of an accountant in an organization. This means that the accounting firm should be more flexible in offering services, rather than following a rigid model. Because to put it quite simply, no two businesses will ever require the same services. There is bound to be some difference in the way transactions are performed within the same domain. The volume of transactions may also be different. Bottomline – The accounting firm needs to offer services that are customized and flexible to meet the actual needs and not the notional needs of a business.
Simple uncluttered interfaces for digital reports
This is the age of technology and accounting firms are expected to offer insights into operations and financial aspects by way of reports that are based on analytics. These reports and insights that crunch numbers will invariably be displayed digitally on screens for the benefit of accountants and key personnel. The whole idea behind these customized reports is to help accountants explain more about transactions and projections. The reports should therefore be simple and in uncluttered interfaces and dashboards. The reports should be simple enough to enable the accountant to explain and interpret the reports displayed on the screen, to business owners or stakeholders, so that various figures and projections are easily understood on demand. Bottomline – Customised generation of digital reports and financial insights.
Outsourcing of accounting services will help an accountant to handle overall activities and entrust this important aspect to other experienced and qualified professionals. The advantages in terms of value that is added can be of great assistance to an accountant and the business he represents. Maintaining a full department of accountants may not always be the best option for an accountant. Separate departments will become necessary when the volume of transactions reach a level where the amount spent towards outsourcing is close to the operational overheads for an accounting department. Till the time these ends do not meet, it would make better business sense to opt for the specialist services of accounting firms. An accountant who decides to outsource accounting and bookkeeping services, needs to ensure that the right choice is made to fully reap the benefits of outsourcing.
BY: AMIT AGARWAL
‘In the midst of chaos, there is opportunity’ so said Sun Tzu. While the present situation in the world of accounting and bookkeeping services can by no stretch of the mind be likened to chaos, it is easily acknowledged as a state of flux. It is this constant state of change that presents outsourced accounting firms the opportunity as well as the need for differentiating to steer ahead into the future. The options present before accountants are manifold, and the challenge lies in embracing change and implementing it. Here is a roadmap for accountancy firms that can take the service to the next level.
Taking service beyond calculations to offer critical business insights
The time has come to shake off ideas about accounting. Accounting needs to go beyond mere number crunching and regulatory compliance to offer value addition to clients in the form of business insights. outsourced bookkeeping services While this has been used effectively by large conglomerates, the smaller businesses tend to look at accounting as merely a requirement for tr transaction-basedctivities or for routine accounting. Offering insights to businesses on related areas or aspects, may have been a tough ask a decade ago, before the era of established automation and cloud computing. As processes are increasingly automated, accountants now have the resources to re-focus, and deliver value additions.
Of what real use is technology, if the saved time and resources are not used to deliver greater value to the processes and objectives?.
Embrace technology for solutions that are cost effective and convenient
Technology has advanced to levels where it is possible to considerably speed up the processes and deliver solutions in a more cost-effective manner. The cloud has opened up the whole accounting services platform to multiple benefits. Advantages of secure storage, easy access, scalability and cost-effective services are a reason for the exodus of sorts to the cloud. The cloud has now become the standard, and not an option anymore. Accounting firms have no choice but to use the cloud for bringing in the twin advantages of convenience and cost-effective solutions. Similarly, the ‘age of the mobile’ and the ‘planet of the apps’ makes it imperative for accounting service providers to offer solutions that can be accessed through mobiles. Accountancy firms can use cloud software’s to manage services like payroll, bookkeeping, and many more.
Early adopters of technology hold the advantage of learning the ropes better and being fully prepared to implement solutions.
Supporting the transition to the post-Brexit era
Businesses will need accountants more than ever before as they negotiate new agreements in the post-Brexit era. Meeting the new compliance and regulatory requirements will require the expert knowledge of qualified and certified accountants. This will present the ideal opportunity for accountants to compensate for the possible dip in revenues due to the EU exit. However, the shock of moving into a post EU phase will be softened by the surge in requirements for accountants to help businesses set up shop in the post EU phase. Accounting services need to be fully aware of all the regulations in force and the overarching effects of certain rules which need to be read and interpreted in conjunction with other applicable laws. This expertise will be in great demand and accountants need to be ready to offer complete consultancy and advisory services to businesses.
The inevitable is bound to happen, and it pays to be not just ready for it, but to make the most of it.
Ensuring compliance with data protection laws
This will not fall into the category of differentiation but will most certainly be mandatory. Privacy laws and data protection regimes are being implemented globally and accountants need to implement the same. As custodians of client data, that is far more important than a business lead, it is the bounden duty of accountants to ensure that the financial information is safe. This means that the use of technology to improve deliverable needs to be chosen with great care. The cloud will be the defacto platform for most services, and accountants need to take care to ensure data protection practices are in place at the cloud hosting service. The new regime of data protection fixes varying levels of responsibilities on all stakeholders mandating the need for strict compliance.
Data protection as a collective and individual responsibility renders it as one among the more comprehensive yet all important regulation that needs to implemented for survival in the new order of digital transformation.
Stay abreast of rulings in tribunals about contract law determinations
IR35 determinations in the UK have widespread ramifications on independent contractors and the situation is bound to only increase post-Brexit. This makes it necessary for accountants to be aware of the latest rulings in tribunals on appeals filed by contractors who have been determined to be within the IR35. By following rulings on contested determinations, accountants will have a better grasp of the law and its interpretation by the tribunals. This perspective will lend great knowledge in helping contractor clients to negotiate terms with end user clients. A comparison of the interpretation by the tribunals and the sometimes-flawed interpretation by the HMRC will help accountants interpret unique contractual clauses in a more informed manner.
Expertise in IR35 law and its interpretation is more by way of accretion – acquiring knowledge through interpretation of conflicting imperatives in contracts.
Taking a granular approach to auditing
Auditing has remained an exercise that is most comprehensive in nature. However, despite its comprehensive processes, there are many areas that have been left out of auditing due to the sheer volumes involved. Consequently, random transactions have been verified in the past, during the audit trail. With technology becoming the force multiplier, audit processes should move into the next level covering entire transaction history. And as all the roundtables suggest, investors and shareholders demand more insights the ‘binary’ audit results prepared by auditors. In other words, recipients need to know more about the ‘how’ and ‘why’ of a report. They need to offer insights about how conclusions were made, with background information. All of this means that auditing needs to be more granular than ever before, leveraging all technological innovations to fulfill expectations.
Technology as the enabler of solutions needs to be leveraged to meet expectations of end users of solutions.
Having systems in place for MTD (making Tax Digital) deadline of April 2019
This is another compliance aspect that needs to be met by April 2019. Accountants who have been offering VAT registration assistance to clients need to offer this service additionally to help clients transition to the MTD scheme. This will also be the stepping stone for the scheme which will cover all taxes in a phased manner over the years. To offer this advisory service/consultancy, accountants need to be on top of their game when it comes to using the right technology and processes to meet the requirements. The need for compatible software and updated records needs to be viewed in the larger context of other data entry requirements and use of the cloud. Utmost security is needed for payroll and data transfer services. Accountants need to offer services that not only meet this specific requirement, but in a manner that will not affect other processes, while at the same time preparing for transiting to the full MTD scheme in the future.
Digitalisation offers benefits; however, significant effort is required for making the transition seamlessly.
Accounting services in the future will be a lot different from the stereotypical notion of services. In addition to the number crunching processes and compliance with regulatory bodies, accounting services of the future need to offer greater contextual information to clients. In a data driven world, where businesses are no more transactional, but relational, the importance of data and insights needs no emphasis. Automated processes and cost-effective cloud solutions will be the differentiators of today, but the new order of business tomorrow. And to be ready for the new order of business, accountants need to fully make use of differentiators today.
How Blockchain Technology will disrupt the role of Accounting as we know it today
The blockchain technology has been making rounds of the global market for quite some time now. When you first heard of the blockchain technology, it must have been in relation to cryptocurrencies, especially the Bitcoin. Blockchain gained momentum as the underlying technology behind Bitcoin. If we were to look at the basics, blockchain is essentially a financial technology. The technology basically concerns itself with the maintenance of a distributed accounting ledger that is openly available and can be shared with many individuals, but it cannot be duplicated, thereby ensuring more security.
Digitalization of the accounting business function is still in its stage of infancy, which can be attributed to the extremely strict regulatory mandates and compliances in the global market. The existing accounting system is built in a way that ensures forgery or fraud of any sort does not take place. For achieving this, it depends on stringent checks and mutual control mechanisms that involve labor-intensive manual tasks. The use of blockchain is expected to ease this process, right from simplifying compliance with government regulations to improving the existing double entry bookkeeping system.
If there is an industry that should expect to be completely disrupted by the blockchain technology, and we are not talking in terms of a deleterious disruption, then it should be the accounting industry.
Blockchain is essentially an accounting-based technology. It resembles an impenetrable and incorruptible ledger that offers accountants a new way of storing and sharing data, with both the processes being simultaneously interoperable. This reduces the necessity of storing data in disparate locations. The technology has taken the accounting industry by such storm that accounting outsourced bookkeeping services professionals are now pursuing blockchain-specific certification courses to get well-versed in the field of blockchain cryptocurrency. From auditing to bookkeeping, the blockchain technology has the power to completely transform day-to-day accounting tasks by improving reporting, efficiency and information access in ways never imagined before. Let us see how blockchain can help accountants save resources and make more from what they already have.
Near-real time transactions:
One of the biggest benefits blockchain will bring is speedy transactions. Every accountant, in the beginning of the month, gets busy with book closing, which involves closing transactions from the previous month. This entire process can take anything between one to two weeks, depending on the volume of transactions. However, with the advent of new financial systems that are replete with advanced technologies, the book closing time is shrinking significantly. With blockchain, transactions from the previous month won’t be dangling in limbo. The time consumed by delays in processing will be eliminated, as near-real time transactions will not need separate closing in the month end. For the matter of fact, the entire month-end book closing ritual will become obsolete with financial transactions being made instantly. With the blockchain technology, accountants will not have to worry about verifying that transactions are sorted and included in the correct month, as transaction reporting will be done automatically when the month ends, and once all transactions will become complete, they will be recorded and saved forever.
Secured information and reduced errors:
The entire blockchain technology is based on encryption which secures every transaction and record on the blockchain. Each transaction using the blockchain technology is encrypted, and every individual participant in the transaction is assigned a unique string of characters for easy recognition. After some time, all the transactions become a part of a larger block, and when this block is finalized, everyone in the concerned network/block is notified about the same. If any record on the block is altered or changed, reviewers can identify when the change was made, due to the time stamp feature available on the block. This type of encryption will not only secure critical business data but also transform the way audits are conducted. Moreover, since every transaction identifies its participants and also has a time stamp, the chances of errors decrease considerably. Reduced mistakes not only during the auditing process but also in ongoing operations, adds more business value in a quantifiable way.
Blockchain can greatly help companies that have to manage large volumes of assets, such as stocks, funds, bonds, deeds and inventory. The disturbed ledger technology can track these assets in a secure manner. With blockchain, transactions are recorded in a ledger and then shared so that multiple copies of the same ledger are stored in the computers of all the involved participants. Every time an asset transaction is carried out, details are shared with the multiple ledger copies on the blockchain. With such a system in place, each participant has the same copy of the ledger, along with complete history of the assets. If shares are bought or sold, records are created for the same, and their origin can be tracked down to the beginning of their existence on the blockchain. This helps drastically reduce asset frauds and thefts and simplifies the entire process of auditing, as all historical records and entries are readily available on the blockchain.
Automated reconciliation and reporting:
With blockchain’s automatic update feature, reporting and reconciliation become extremely hassle-free and convenient. As and when transactions are made, all the related details are automatically recorded on the blockchain, which makes it easier to automatically sort and register journal entries. Details and information can be viewed in the real-time as transactions are conducted, and every detail is simultaneously recorded or updated across all the live copies of the ledger. Whenever any new blockchain is developed, its information can be stored in the transaction details. Enterprises can also develop unique frameworks to make the blockchain technology work seamlessly as per their specific business requirements. The accounting and auditing teams will reap maximum benefits from these detailed and thorough fraud-resilient transaction records.
Cost-effective auditing and compliance:
Auditing professionals should expect to benefit the most from the blockchain technology. With blockchain-powered data, companies can conduct audits in a faster, more precise and better automated manner. Projects that earlier required weeks and months for completion, with the help of blockchain can be completed in a few days. While conducting audits, officials can find complete details of transactions right on the blockchains, which will make it really hassle-free to confirm and verify the financial status of the companies being audited. This will have a profound impact on the way audits have been done till date. Blockchain solutions can also be integrated with data analytics to help auditors with transactional-level assertions, so that more time is available for higher-level inspections.
Should accountants be worried?
One of the biggest misconceptions about the blockchain technology is that the accountant’s role will become obsolete, which is not going to happen anytime soon. Blockchain is in no way going to replace human accounting, it will only assist it. The distributed ledger technology will significantly impact all accounting functions, right from auditing to security, and help companies store, retrieve and interpret data in a systematic and an automated manner. Its role will be more of a support assistant rather than the mission pilot, and accountants corporate payroll services in uk do not have anything to worry about.
Accountants should consider blockchain to be a wave of change that will only offer better opportunities. They should leverage these opportunities to realize and understand how blockchain will impact and can be used in future applications to create blockchain-powered accounting solutions and services. Accountants, basically, are experts in records management, and all the blockchain technology does is facilitate a simple and an interoperable record keeping system, which can be easily accessed by auditors and other authorized officials. Blockchain, therefore, will only reduce the burden for accountants by offering a helping help.
The main thing to consider here is how accountants respond to the blockchain wave, and yes, it is not going to be easy, in fact it may also seem very intimidating. Accountants should be willing to update their knowledge as per the nuances of the blockchain technology. They will have to gain a complete understanding of what blockchain is and how the technology works, which is why various accounting firms and even educational institutes, these days, are offering specialised courses on the blockchain technology. This is also because the market demand is growing, slowly but surely, and companies are increasingly incorporating the blockchain technology in the development of their products and services.
It actually isn’t surprising that claims are being made about the blockchain technology replacing accountants because that is usually the first thing everyone says about any new technology that hits the market. We need to realize that technology in no way can replace human reasoning and comprehension. Sure, processes will become automated, but that doesn’t mean monitoring will not be required. Even these automated processes will need close monitoring, which cannot be done without human involvement. The blockchain technology, therefore, will surely change the way accounting has been done till date, but we don’t foresee this distributed ledger technology to completely eliminate human involvement anytime in the near future.
In the world of outsourcing bookkeeping and accountancy services introduction of Blockchain will be a huge boon, as it will help establish trust and track all assets between the accounting firm and an outsourced accounting firm like Outbooks.
BY: AMIT AGARWAL
Suite 7, First Floor, Amba house,
15 College Road, Harrow
Middlesex - HA1 1BA
Registration No: 10746177
+44 330 057 8597
Unit No.110-111, Spaze IT Park, Tower b4, Sohna Road, Gurugram, Haryana – 122001
91-92, Jai Complex, Alwar, Rajasthan, India -301001
What is Corporate Governance?
Corporate governance refers to rules, regulations, practices and principles on the basis of which organizations are managed and controlled. It identifies individuals who have the power and authority to make decisions in an organization. In its truest form, corporate governance is a systematic process that enables the management and the decision makers of an organization to tackle the challenges associated with running the organization. It ensures a balancing act between the interests of companies’ stakeholders, including investors, shareholders, customers, suppliers, the government, the management and the community. Corporate governance offers a management framework for achieving a company’s business objectives, and it entails every management function, ranging from business planning and internal controls to corporate disclosure and corporate social responsibility. The most importance task of corporate governance is to ensure the industry-wide rules, regulations, controls and policies that dictate the corporate behavior of companies, are set in place. The corporate governance in organizations is usually managed by the board of directors who shoulder the responsibility of making the right calls for improved business functions outsourced bookkeeping services.
Corporate Governance and Accounting
Corporate governance and accounting walk hand in hand; one cannot function without the other. Good corporate governance has become the deciding factor that enables companies to maintain a strong financial position in their respective markets. Most corporate governance failures in events across the globe have usually found the accounting and bookkeeping services department at fault. The accounting department is the gatekeeper of all corporate governance activities in organizations. Good corporate governance builds the faith of customers in companies, thereby leading to lower capital costs in investments. Accounting is the key enabler of good corporate governance and is considered an effective means of improving the corporate governance in organizations. Accounting professionals periodically compile data to report companies’ internal activities to stakeholders. However, all accounting processes in organizations are rigorously controlled and monitored by certain global standards and regulations. The industry-wide regulations make it mandatory for companies to disclose certain information to the general public. For instance, companies in the US have to strictly follow the Sarbanes–Oxley Act (SOX) and the revised listing rules for the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ) to comply with the industry regulations on financial disclosures, committee and board nominations and auditing policies. Similarly, enterprises in the UK have to follow the rules mandated by the UK Corporate Governance Code that was published by the Financial Reporting Council of the UK. Over the past few decades, several instances of corporate dishonesty have surfaced, which have led to more stringent corporate governance norms and policies. For example, in Nigeria, Cadbury Schweppes, a major global player in the confectionery and beverages markets, was fined a whopping 21.2 million naira for presenting incorrect account details between 2002 and 2005.
In cases such as these, accounting can help clear the picture for organizations by undertaking several tasks. It helps set up a clear code of conduct as per which the governance processes in organizations should be carried out. It is the role of the accountant to ensure a fraud risk management program is in place, conduct regular assessments of the company’s risk exposure and implement prevention techniques to avoid fraudulent activities and mitigate their impact, if any. The accountant should appoint an executive-level member from the management team who will be responsible for dealing and addressing the concerns related to frauds. The accountant should also identify security gaps in the organizational framework and formalize the roles and responsibilities of the board members, the audit committee and the personnel involved in fraud management and prevention.
The Role of Accountants in Corporate Governance
For an accountant, the scope of work in corporate governance is wide, and ensuring transparency and accountability in the everyday undertakings of companies is the most critical task. Accountants shoulder the responsibility of organizations in disclosing the correct information not only to the shareholders but also to the stakeholders. Accountants play a huge role in building the trust of stakeholders in a company’s brand. In corporate governance, the role of accountants is two-old. The first is to report the flow of capital in and out of various departments and monitor the undertakings carried out with the capital and where the capital is being invested. The second is to ensure a proper framework of accountability and transparency to address the interests of stakeholders. The role of accountants in corporate governance has been explained in details in the section below.
Disclosure and Transparency Management
The OECD principles of corporate governance mandate organizations to honestly disclose all information, including their financial status, performance and ownership, to stakeholders for maintaining transparency. Disclosures help improve the public understanding about a company’s structure and activities, its corporate policies and its performance. Disclosure requirements do not usually exert any unreasonable administrative cost burden on enterprises. Moreover, companies are not expected to disclose information that may endanger their competitive position, unless the disclosure is necessary to fully inform the investment decision-makers. Accountants facilitate the timely disclosure of all material developments that arise between the regular reporting intervals. They also support the simultaneous reporting of information to all shareholders to ensure impartial treatment. Accountants confirm high-quality standards are put in place to help stakeholders monitor the company performance, by providing increased reliability and comparability of reports and improved insights into the company performance, which, in turn, assures transparency.
Accountants come very handy while planning strategies for governance compliance. Companies can plan effective business strategies based on the information made available by accountants. They can decide how to function, where to invest, when to invest and how much to invest so that returns are good and stakeholders are also happy. Accountants can help companies make effective plans regarding their growth and operations. For instance, accountants can help identify areas that are incurring more costs than returns. On the basis of this information, companies can plan growth strategies in a way that not only complies with industry regulations but also ensures good returns.
Public Accountability Management
Companies are accountable to the public in several ways. Organizations should meet their obligations, such as paying taxes, to the public. Based on the financial status of organizations, stakeholders consider making investments. Accountants play a major role in ensuring the data reaching stakeholders is accurate and not misrepresented. Accountants also have to monitor processes to make sure companies are not indulging in unethical practices to present incorrect financials to the public. Accountants remind companies of the consumer demands, encouraging them to keep the public interests in consideration while formulating strategies.
Shareholder Accountability Management
As the name suggests, shareholders are entities who have bought at least one share of a company. Companies are directly accountable to their shareholders, as shareholders have financially invested in them and are also the part owners. It is the responsibility of organizations to provide complete and detailed financial information to the shareholders. Based on the information shared, shareholders can take further steps, such as increasing investments, disinvesting, or voting against certain undertakings that are resulting in losses. Accountants have the responsibility of carefully consolidating this financial information to present accurate figures to the shareholders.
Cash Flow Management
Accountants help companies not just plan long-term strategies, but they also help addresses short-term and the everyday necessities in organizations. Maintaining a healthy cash flow is one of the major responsibilities of accountants. They draw a clear picture of how much cash a company has in-hand, which helps priorities and take crucial financials decisions. Based on the information sourced by accountants, companies can make decisions regarding supplies, resources and equipment in a way that doesn’t overspill their in-hand cash. Accountants also help enterprises manage their line of credit and monitor all their short-term financial resources, which assists in avoiding unnecessary debt. ‘
Financial Reporting and Management Reporting
Though organizations have several departments that may or may not be interdependent, all of them are bound by a common thread called accounting. Financial reporting entails the reporting of company financials to stakeholders, whereas management reporting involves the internal management. Accountants have to manage both these processes and consolidate the company’s financial data to report accurate figures. Financial reporting helps stakeholders by offering valuable insights into the company financials, whereas management reporting offers the internal management of an organization detailed inputs and information about the state of affairs in the company. Accountants play a crucial role in helping organizations conduct both financial and management reporting.
Corporate governance is as much a social undertaking as a financial responsibility. Accounting walks alongside corporate governance, providing support in all its functions. Accountants help craft a vision for companies and assist in setting up proper controls, effective audit systems, proper fraud risk management solutions and accurate disclosures that comply with the international standards and best practices. It is the responsibility of the accountant to make corporate governance the priority of enterprises, thereby ensuring the auditing and accounting tools serve the overall governance functions in companies.
Suite 7, First Floor, Amba house,
15 College Road, Harrow
Middlesex - HA1 1BA
Registration No: 10746177
+44 (0) 330 057 8597
Unit No.110-111, Spaze IT Park, Tower b4, Sohna Road, Gurugram, Haryana - 122001
91-92, Jai Complex, Alwar, Rajasthan, India -301001
We are officially in the era of digital transformation where technology has greatly impacted audit processes. This has ushered changes that were hard to imagine as possible about a decade back. While the accounting profession has by and large embraced technology in various processes, it was restricted to the documentation, calculation, stor age and retrieval process. However, this is all set to change as cutting-edge technology dons a greater role in auditing. The clamour for different reporting and financial statements has been growing, and technology has all the right answersv.
Taking a leaf out of fintech companies for development of intelligent software
Bookkeeping outsourcing company in uk. Processes that will be touched by technology will include those areas where it may be necessary for a machine to understand and use that knowledge to identify complex information. Fintech companies have been able to deploy automated solutions by leveraging the power of AI and machine learning. Auditing will similarly find a greater role for technology, beyond the present functions. For instance, technology has developed to a level where it is possible for AI powered systems to look at all the data of a company that is being audited and identify anything that is amiss. This will help auditors to turn their focus to flagged areas that need more of their attention.
Evolving reporting requirements
Bookkeeping outsourcing company Present audit reporting helps investors and shareholders understand the financial health of businesses. However, in the context of a data driven world with more and more information available, there is an increasing chorus for auditors to share additional information. Stakeholders are of the opinion that auditors possess more information, than what is actually reflected in the reports. And the demand is for more contextual information from auditors about how a specific conclusion was made or arrive at. Readers want to know how the auditors arrived at a conclusion. This open the floodgates of confusion. Auditors crunch numbers and make conclusions, expecting a reader to do the same is an invitation to chaos. However, technology has the ability to present relevant information in the right form for dissemination, that is in alignment with the overall findings/conclusion.
Impact of revisions and penalties
corporate secretarial services in uk The Financial Reporting Council released revisions to International Standards on Auditing (UK), which had more to do with the Code of Ethics. This has great significance for auditors and by extension the companies that are being audited. The changed standards, despite being limited in scope can have implications for stakeholders. This needs to be read in the context of the fines levied by the FRC, on some of the top global auditing firms for misconduct. Even as the dust began to settle over the fines and the circumstances surrounding it, most of the iconic and respected auditing firms commenced an overhaul of their systems and processes, bringing in more technology driven processes to strengthen existing processes. This will be the order of the future, as auditors look towards technology for greater compliance.
Moving from sample testing to testing of all transactions
In the future, auditors will harness technology to carry out checks of all transactions, and not just rely on a sampling or random check of transactions. While the certainly humungous volumes of transactions may have come in the way of checking out all the transactions in the past or the present, this is all set to change. With the use of the right technology, not only will all transactions be checked, they will be completed at high speed, which means that the process of checking will not add to the time element. And this aspect of checking all the transactions will help auditors to gain more insights about the financial health and other inputs about the organization and the domain it operates. This will be invaluable to investors and shareholders who will now be able to understand reports on the basis of checking all transactions and not just a sample. Sampling has a probability of error, which will be corrected in the future.
The need for speed
The new techno-social order has turned time on its head. Processes that once took a specific period of time has now been shortened drastically. As a consequence, all other allied processes and procedures are also expected to commence/conclude at proportionate speed. Effectively, this has led to a cascading effect. Audit, resultantly, requires to be concluded faster than ever before. Manual processes do not stand a chance of delivering results at speed or with the accuracy and precision required. While it is impossible for technology, as it stands now, to replace the power of human intuition in tasks as complicated as auditing, many of the tasks that are repetitive or rote in nature need to be entrusted to technology and automated processes to be able to meet the deadlines.
Leveraging the power of blockchain for cost effective audit processes
Blockchain is the buzzword that will continue to hold sway over businesses well into the near future. And by virtue of being a distributed ledger, blockchain is the natural bedfellow for auditing processes. Auditors need not seek information or wait for clients or third parties to furnish statements, or any documents for verification and cross-verification. Auditors can simply carry out the verifications from blockchain ledgers. With the power of offering verifiable and immutable transactional information, these ledgers will save a lot of time and money, in addition to the assurance of offering information that is accurate and free from errors. This is basically, because the transactions themselves would have been carried out only after fulfilling the criteria or conditions of all –parties involved in the transaction.
Analytics only as good as the data that is fed
Analytics can be only as good as the data that is fed, which means that standards also need to improve so as to offer data that is of the right standard. While systems will be powered to detect anomalies over entire transaction history, the advantage of perception that is available to the human mind and the logic of perspective will be unavailable to technology driven systems. This will make it mandatory for records to conform to certain standards. The quality of the data and the processes or technology that is available to bring in the data from many sources needs to be advanced so as to prevent gaps in data capture and its use.
The need for more regulations and standards
Past processes had stakeholders trying to catch up with the regulations and standards. For instance, auditors and organizations had to fulfill or meet the standards and regulations as laid down and the need of the hour used to be a scramble to meet the standards. However, with changes in the way business is conducted, there are multiple issues which cannot be met or fulfilled by existing standards. This turns the whole equation of regulations and standards on its head. Regulations and standards are now expected to keep pace with the developments and evolving changes in the world of business. Till the regulations and changes are in place, auditors and businesses will have to work within the contours of existing regulations which may not be very easy considering the inherent differences among domains.
Auditing is a proven facilitator for growth, in addition to meeting the requirements of accounting and financial reporting. While nations have their own set of policies about the size of businesses that need to be audited or not audited, it is a proven fact that auditing is one of the pillars of growth of a business. Technological innovations will assist the acumen of humans to bring about greater accuracy, improved reporting and faster conclusion. Auditing will not be limited to random checks but will encompass the whole history of transactions for specific periods. Contrary to popular belief, technology will not take the place of humans, but will help humans in their deliverables.