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Accounting firms outsource compliance functions to achieve high efficiency, cost-effectiveness, and access to expertise.
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Why should accounting firms outsource compliance to boost efficiency?
13 February 2025
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7 minute read
This ensures they remain compliant and allows them to focus on core competencies.
- According to a report, 74% of Australian firms believe outsourcing helps them manage compliance risks and adhere to regulatory standards effectively.
- Around 53% of the firms in Australia outsource finance and accounting operations due to the necessity to adhere to compliance standards.
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To understand the significance of compliance outsourcing, you must know the regulatory bodies that frame the compliance standards and their respective functions.
Key regulatory bodies
The Council of Financial Regulators (CFR) coordinates Australia’s central financial regulatory agencies. Under CFR, the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investment Commission (ASIC), the Reserve Bank of Australia (RBA) and the Treasury are the core regulators.
All the regulators are responsible for overseeing the Australian Financial market. They frame regulations, scrutinise breaches and enforce penalties.
Outcomes of Non-compliance
There are severe consequences of non-compliance in the Australian regulatory environment. Few are,
- Monetary impacts like hefty fines, penalties, loss of customers and business contracts.
- The possibility of reputational damage due to data breaches and other violation permanently spoils businesses reputations.
- Operational downtime and diversion of more resources towards inquiries and legal proceedings.
Top compliance challenges in Australia
Most businesses in Australia outsource their finance and accounting tasks to accounting firms, which help them with financial reporting, bookkeeping, tax compliance, advisory, audit, assurance services, and more such services,
They face unique compliance challenges due to various factors, such as the additional costs of managing the compliance function, staying on top of regulatory challenges, and difficulty understanding laws and standards pertaining to Australian geography.
Keeping up with regulatory changes
The business needs to set up an independent division in the working space to monitor any regulatory changes. This unit also determines how the changes affect its operations. This process can be expensive and time-consuming, as dedicated professionals must stay alert by cautiously following industry trends.
High costs involved in the execution
Audits and evaluations are a businesss primary functions. As a company grows, the number of statements to be audited and evaluated increases year-on-year for compliance. This process incurs additional costs for hiring, training staff and purchasing new software and tools, which affects the business’s scalability.
Difficulty in hiring and retaining expertise
Conducting regular audits, reviewing the audits to ensure adherence to regulations, checking for compliance issues, filing reports for regulatory bodies, analysing consumer complaints, monitoring compliance control systems, and tracking any new developments in compliance are a fraction of many activities to be followed by a compliance professional in a business. Multiple tasks to be followed by a compliance professional and a shortage of skilled employees due to complex certification requirements remain challenges in hiring and retaining compliance experts.
Integrating technology
In this digital era, all business information and client-sensitive data are stored in the cloud. This demands heavy investment in IT and data security infrastructure. It also requires integrating the latest technology with business processes, which can burden business owners.
Unable to balance compliance with core activities
Business owners who cannot afford a dedicated team to handle compliance must spend significant time monitoring changing regulatory frameworks and ensuring their business stays compliant. This takes time away from focusing on core business activities.
Businesses in Australia can benefit from partnering with offshore experts who are aware of regulations, have robust data-security infrastructure, employ relevant skilled professionals, and own the latest technology and tools.
Why do you need to outsource compliance?
Cost efficiency: You don’t have to bear the cost of running an in-house compliance unit. Also, the costs of building a customised infrastructure, including systems, software, and following protocols, are saved.
Access to qualified professionals: Offshore providers are aware of the changing regulatory laws and have years of experience in multiple regulatory domains.
Scalability and flexibility: The business does not need to hire or train additional staff or add new tools and technologies, so the offshore providers can scale up and be flexible according to the business’s changing needs.
Focus on core activities: A business’s ultimate aim is to grow and be profitable. Outsourcing non-core activities like compliance helps the business free up its internal resources responsible for carrying out core operations.
Access to tools and technology: Your outsourcing partner offers automation tools for regular compliance tasks, data analytics tools to handle large volumes of data and other latest AI tools required for efficient compliance management. These tools improve the speed of compliance filing and save you money when purchasing them.
Factors to consider when choosing a dedicated outsourcing provider
Selecting an outsourcing partner that does not align with your business objectives can be detrimental in the long run. For instance, if your business needs tax-compliance outsourcing, locate a partner who is also an expert in finance and accounting outsourcing in its full scope, so they have adequate experience and expertise to support your business.
Critical factors in choosing the right outsourcing partner
- The partner should provide an engagement model that matches your business’s objectives.
- The partner should have a unique selling proposition and specialised expertise that puts them ahead of their competitors in the highly competitive outsourcing landscape.
- Has an in-built robust IT infrastructure that safeguards client’s data from cyber threats and complies with industry standards and regulations.
- Outsourcing to a business that has developed across various countries and has expertise and insights specific to your geography will be an added advantage.
- Revisit and get an outlook on the partners services in the finance, accounting, and tax- compliance outsourcing domains. One with long-term clients in these domains is the ideal one for you.
Choosing a business partner who aligns with your business objectives can be intricate. Stay informed and analyse in-depth before selecting the outsourcing partner who matches your strategic goals.
Sundaram Business Services is a business process outsourcing company with offices in Australia, India, and the UK. With over 20 years of experience in the Australian market providing outsourced teams to Australian businesses in Accountancy, Portfolio Management, Self Managed Super Funds, and Mortgage Broker support, our company has become an extension of yours.
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