What should be done to achieve a fully successful outsourcing of the chief accountant? How to plan such a process?
There are three key elements here – the agreement concluded between the organization and the accounting firm, the proper introduction of the chief accountant to the tasks they will be responsible for, as well as ensuring an effective cooperation and proper allocation of duties between the chief accountant and the internal accounting team.
In this article, we will discuss the first component, namely the agreement regulating the rules of such cooperation. What should it include in order to ensure a harmonious cooperation and minimize the number of disputes between the entities?
Above all, the parties must make sure that the agreement will regulate:
The scope of services, method of provision and the applicable deadlines must be described in the agreement in the most specific and detailed way possible. It will allow avoiding doubts and conflicts within the scope of duties of the chief accountant in the course of performance of the agreement.
In general, the scope of duties of the chief accountant in case of outsourcing of such services will be as follows:
Based on our experience in serving the function of chief accountant at many organizations, we can definitely say that it is of crucial importance to precisely decide on the duties of the chief accountant and the way they will distributed between the person serving this function and the internal accounting team already at the stage of conclusion of the agreement. In order to make the cooperation way more effective, before the conclusion of the agreement, the accounting firm should carry out a detailed inspection of the accounting processes and relevant persons responsible for individual processes should be assigned.
One should also make sure that the agreement accurately identifies the rules of remuneration for the provided services. Most often, the remuneration is specified as flat-rate remuneration while certain services exceeding the standard scope can be considered as the so-called additional services. This is usually the case in consultancy concerning settlement of unusual transactions or support during the implementation of a new accounting system. The remuneration for additional services usually depends on the amount of labor (hourly rates).
Another important element that needs to be clarified in the agreement is the responsibility of the accounting firm for improper performance of assumed duties. Additionally, one needs to make sure that the accounting firm has a valid liability insurance for damage caused in relation to the provision of accounting services.
The organization also needs to ensure as to the confidentiality of data that will be provided to the accounting firm. That is why the outsourcing agreement must include provisions on keeping confidentiality by the company that will provide accounting services.
After negotiations between the accounting firm and the organization and with acknowledgment of the above-mentioned requirements, the agreement can be finally signed.
Of course, the whole process does not end there. What are the next steps then? We will describe them in the next article of our series.
Author: Agnieszka Tyczyńska-Osińska — Senior Manager of Accounting Department at MDDP Outsourcing