3 Legal Obligations You Need to Know When Outsourcing Offshore

I recently presented at the “Accountants Daily Strategy Day” in Sydney and Melbourne. One of the key questions over 500 accounting partners, managers and bookkeepers wanted the answer to was: What are your legal obligations when you choose an outsourcing partner?

Although the points presented below are primarily relevant to those in the finance and accounting industry, I believe no matter where you are in your journey of outsourcing offshore, or whichever industry you’re in, these points will have significant relevance. Specifically, they should help explain how you operate internally and choose your service provider while keeping your business safe and protecting the relationships you have with your customers.

The APESB, CAANZ, CPA, ATO and IPA (professional industry bodies of the finance and accounting industry) all have similar ideas around outsourcing/offshore.

Ultimately, the onus on the registered practitioner to exercise appropriate due diligence when outsourcing work and sending information offshore, including ensuring appropriate disclosure. It is also important to be mindful that when outsourcing and offshoring that the service is provided to a competent standard and that there are adequate supervision and control arrangements.

Ensuring appropriate DISCLOSURE

This permission may be by way of a signed letter of engagement, signed consent or other communication with the client. In all cases, the relevant communication should outline the disclosures to be provided, as well as information about the entity/entities that will have access to your client information offshore.

Being honest and transparent with your customers about how your business operates is always the best approach.

Service is provided to a COMPETENT STANDARD

With this point, it is not sufficient to simply say that ‘supervisory work’ is being undertaken and that work is being reviewed. So how do you ensure competency? There are many ways. One of the best examples would be training offshore staff in Australian regulations or sending a registered member of staff to be onsite overseas, ensuring competent standards are met.

Creating a documented on-boarding and knowledge transfer plan that also includes relevant ongoing specialist and regulatory training is key.

Adequate supervision and CONTROL ARRANGEMENTS

Although there is NO STANDARD PROCESS outlined by the governing bodies, solid workflows, documented procedures, governance frameworks and policies will show appropriate direction and command.

Documenting controls and command allows for process improvement, security and high performing teams.

The Australian Privacy Act 1988 (Privacy Act) underpins these obligations and is relevant to any business. Ensuring your service provider is aligned not only with your vision and mission but also the Privacy Act is critical, in particular The Australian Privacy Principals #8 which deals with the disclosure of personal information – cross boarder.

Please feel free to reach out if you’d like to discuss the above, or any other relevant matter to ensure the successful implementation of an outsourcing, offshore initiative.

Check out our photos during the AccountantsDaily Strategy Day 2019 last 27 & 29 August 2019 in Sydney & Melbourne!

Photo courtesy of Christine Hanna, hammerjack’s Senior Accounts Manager