Accountants and Outsourcing | Cheap Tax Account
At Taxopia we don’t believe in outsourcing clients tax returns or business accounting. The main reasons being (a) lack of quality control and supervision and (b) lack of security over extensive personal identification details that most taxpayers include in their personal tax returns and business tax returns. As online accountants (CPA’s) we have obligations to secure client data and to supervise the tax returns and get the best tax outcome for clients. That typically means we need to know the clients numbers well and that is hard to achieve if everything is happening in another office on the other side of the world.
So if you are looking for a low cost solution don’t choose one that outsources your tax returns. Many do.
This article is take from The Age June 8 2016. https://www.theage.com.au/money/tax/australian-accountants-are-using-offshore-outsourcing-20160601-gp9g5j.html
Australian accountants are using offshore outsourcing
Australian consumers are used to the offshore call centre when dealing with telcos. But would you expect your accountant to outsource your tax return to a cheap outfit overseas?
Many accountants in Australia are shifting large proportions of their operations offshore to countries like India and the Philippines where workers can be paid as little as $5 an hour to complete time-consuming compliance work.
While legal, many consumers are unaware of this practice as they are not told who is personally processing their tax returns or handling the back end of their financial affairs. The only disclosure comes in the fine print buried within an engagement letter. This means many consumers are paying a premium for accounting services, without knowing that the person providing the service is based somewhere such as Bangalore, earning way below the Australian minimum wage.
Amanda Newton, of Melbourne’s Negotiis Business Advisors and Accountants, has witnessed many accountants boast about boosting their profit margins by engaging offshore labour. She believes the practice is widespread in Australia, yet most clients remain unaware that it is occurring. Employing eight local staff including a graduate, Negotiis Advisors doesn’t use offshore staff despite the considerable cost savings on offer.
“Offshoring is a short-term race and undermines the overall sustainability of our economy,” Newton says. “The lifeblood of a public practice is a client base of employed individuals and profitable businesses. Many of our clients own and operate small businesses. Providing local employment opportunities is core to community participation and building a stronger local economy. If we are taking away from the economy by taking away local jobs, surely we are working against ourselves too?”
Lee Court of BOSS (Back Office Shared Services) believes using offshore accountancy staff is a legal way for accountancy firms to dramatically boost their profit margins. With both top-tier accounting companies and sole practitioners using BOSS to access overseas staff, Court contends that the demand has been high since BOSS began trading in 2004.
“There is consistent interest in using offshoring as a way of gaining many benefits, including freeing up time, reducing costs and accessing another pool of staff without being limited by the Australian labour market constraints,” Court says.
While there are obvious cost savings on offer when significantly reducing the hourly rate paid to an accountant, offshoring also allows accountancy firms to avoid paying superannuation, annual leave, maternity leave and workers’ compensation.
Many question the quality of work produced by offshore accountants who aren’t native English speakers, yet Court contends the standard is high. “Our staff are typically CA [chartered accountant] qualified or studying to be so and follow the CA code of conduct. Our staff are reference-checked in the same way any scrupulous chartered practice in Australia would vet their staff,” Court says.
Lack of transparency is a concern for consumers, with sensitive personal and financial information being entrusted to an unknown overseas entity, often without their knowledge. The BOSS website recommends accountants keep this information “low key” by simply including a statement in an engagement letter (to fulfil legal requirements) but it could be argued true transparency should involve a conversation with a client.
CPA Australia advises that all its members and those of Chartered Accountants Australia and New Zealand and Institute of Public Accountants need to abide by the rules and procedures outlined by the Accounting Professional and Ethical Standards Board. This includes ensuring outsourced service providers meet certain professional standards and have adequate security measures in place to safeguard data. Furthermore, the standards board stipulates that clients must know the geographical location of outsourced staff and the extent of their involvement in delivering professional services.
Ultimately, hiring staff located overseas is legal so consumers need to make an informed choice when choosing an accountant to manage their financial and taxation affairs. Instead of skimming over (or not even reading) the fine print, concerned consumers should take the time to read all documents carefully to see if offshore staff are used by their chosen accountant. Alternatively, having a good, old-fashioned conversation with your accountant is a good way to gauge if they are using offshore staff.
While many Australian accountants continue to resist the trend, many more are taking advantage of the immediate cost savings available. Whether this is a sustainable approach to doing business is yet to be seen, as are the potentially detrimental long-term impacts on their brand, business and the local economy.