The Tax Practitioners Board (TPB) recently released a draft practice note which aims to assist registered tax practitioners understand obligations under the Code of Professional Conduct (Code) in relation to the use of outsourcing and offshoring.
“Offshoring and outsourcing services to third parties is of increasing significance to the tax profession and we welcome comments on the exposure draft from tax practitioners and other interested stakeholders,” said TPB chair Ian Taylor.
“The TPB has developed this practice note to assist tax practitioners to understand their obligations under the Code, raising awareness of relevant considerations when entering into arrangements involving outsourcing and offshoring and providing a consolidated listing of further reference information.”
Nick Sinclair, president of The Outsourced Accountant, welcomed the news, telling Accountants Daily that the introduction of such a practice note indicates an increase in accountants engaging in offshoring and outsourcing processes.
“The fact there is a draft code from the tax practitioners shows it is becoming common in the industry. Data from webinars indicates that over 80 per cent of firms are outsourcing/offshoring or contemplating it,” Mr Sinclair said.
“Overall The Outsourced Accountant welcomes these guidelines so accounting firms and their clients can have very clear view when choosing a provider offshore.”
However, Mr Sinclair believes that the practice note is angled towards a small part of outsourcing, which he believes isn’t the most popular tactic.
“The draft guidance is mainly written for project outsourcing, where you send your tax work offshore and the offshore provider completes it and returns it,” he said.
“It doesn’t cover much for the fastest growing area within offshoring industry which is where a firm employs a dedicated employee for their firm through a third-party provider. While it is covered, it is only minimal and shows the real lack of understanding for the models of offshoring and outsourcing.”
Based on his own experience, Mr Sinclair notes an increased appetite for offshoring, particularly in the mid to large size market.
“Most, if not all, top four and second tier firms have offshore teams, and if surveys are correct we will see over 60 per cent of firms offshoring in some capacity within 12 months,” he said.
“The more guidance, guidelines and education the TPB and industry bodies can provide the better for accounting firms and offshore providers.”
The exposure draft is open for comment, with the TPB accepting submissions until 12 October.