Whether you’re a small business or large, you will deal with accounting and finance related tasks in the business. Being an expert in finance, taxation, and bookkeeping, you can surely manage your business. But the problem arises for those businesses that don’t have efficient knowledge in these matters and eventually outsource accounting from third-party Company. Well, there is nothing wrong in getting your business accounts outsourced. But outsourcing practice has raised some ethical issue about client’s confidentiality. As a client, you may also face ethical issue when outsourcing accounting services. Therefore, in this article, I am going to talk about some ethical issues one can face when outsource accounting services. Moreover, how AICPA (American Institute of Certified Public Accountants) professionals’ ethics executive committee have addressed these issues.
Let’s now talk about ethical issues and how AICPA tackle them.
Some ethical issues of outsource accounting services and their solutions
Reach each ethical issue thoroughly and effects they can make on accounting practices. Some ethical issues you can face related to:
## Third-party provider
The first issue you can face is how honest, reliable or secure third-party provider is. Of course, you’re outsourcing accounting services which means you need to hire a third-party provider who can manage your business finance. The problem arises when these third-party providers are not honest & transparent enough with you in maintaining records related to transactions, payrolls, taxation, bills, etc.
According to AICPA rule 102: Integrity and objectivity, in the performance of professional service, a member has to maintain integrity and objectivity. He must be free of conflict of interests, and shall not knowingly misinterprets facts or subordinate his or her judgement to others. Moreover, the client has right to know about his taxation, finance, and other aspects related to his business.
## Privacy of personal information
This is one of the most concerning ethical issues in present web world. Hacking, data stealing, and spam are at peak. No doubt, there are some companies that aren’t secure enough and will stab you on the back. Undoubtedly, there is a risk in outsourcing accounting services as you never know who may blackmail you for the money. Let’s understand this with a real incident which took place on October 22, 2003. Here a Pakistani transcribe of medical information threatened a medical center in San Francisco, with posting patient’s medical records online until she received money. She claimed that it was her dues. In simple words, she was blackmailing the centre to pursue third-party (another outsourcer who she said help her in getting money).
According to AICPA rule 103: Confidential Client information: it addresses the issue of a third-party service provider to provide professional services to clients’ services to the AICPA member. Well, you no need to worry about it. CPA has the information encrypted which helps firm to reduce the possibility to happen such things. But clients can still receive fraudulent messages which they have to be take care of on their own.
## Performance while providing services
Some outsource providers don’t comply with the performance standards and the way they provide services. The professional sometimes forget the responsibility of providing services to clients. Thereby clients have to face the issue of their lack of professionalism. Therefore, they aren’t able to fulfill the clients’ requirements when they ask for adequate data about their business performance. Another ethical problem arises here when the information provided to the external service provider is incomplete, inaccurate, or inconsistent.
According to AICPA rule 201 and 202: Standards of Performance: it addresses this issue in two ways. First, CPAs must exercise enough care while performing professional services. Second, CPAs should adequately plan and supervise the performance of professionals’ services. Moreover, rule 202 deals with technical standards services performed. Well, it is crucial that the U.S. CPA examine the accuracy and completeness of the tax information before conveying it to the outsourcer for processing overseas.
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Outsource accounting services are not bad rather it eases out the way you handle your business and other aspects of works. But there are some ethical issues involved in the services which make outsourcing a bad practice. I have explained the ethical issues (along with how the issues can be resolved) above which you might face when outsourcing accounting services. Nevertheless, if you feel the company is not behaving up to standards and providing you quality services, you may file a complaint to CPA firm. Hope the article was informative and helpful.
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