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Accounting outsourcing practices in Malaysia

Accounting outsourcing practices in Malaysia Purpose – Firms in Malaysia are in an enviable position in view of Malaysia's standing as a leading outsourcing hub in the region. Despite that, little is known about the accounting outsourcing practices, risks and control in Malaysia. This paper aims to explore the practices, decisions, processes and perception of risks and control in accounting outsourcing. Design/methodology/approach – This paper is written based on survey data which were collected using a questionnaire. The questionnaires were directed to the head of the accounts and finance department of each company. A total of 51 companies participated in this study and approximately 47.1 percent of the respondents are involved in accounting outsourcing. Findings – Findings show that the most common outsourcing activities are financial reporting and auditing while the main reasons to outsource are quality service, core competencies and scale economies. The decision to outsource accounting services is related to the type of industry and expertise in the firms. Most of the firms outsource their preparation of account and audit work as well as tax for better quality services. Firms rely more on formal contracts and concerns about confidentiality and security of accounting data. Research limitations/implications – Because of the limited number of responses, the findings may not be generalized to the overall population. Nevertheless, they can be used as background information for subsequent research in accounting outsourcing activities. Future research may consider the use of in‐depth case studies for understanding challenges in accounting outsourcing particularly in making decisions, managing processes and mitigating risks. Originality/value – While it can be regarded as exploratory, this study makes an attempt to uncover the risks and control issues in accounting outsourcing. The findings will contribute to the body of knowledge in accounting outsourcing and enhance the understanding of the current accounting outsourcing practices in Malaysia. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Asia Business Studies Emerald Publishing

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Publisher
Emerald Publishing
Copyright
Copyright © 2012 Emerald Group Publishing Limited. All rights reserved.
ISSN
1558-7894
DOI
10.1108/15587891211191380
Publisher site
See Article on Publisher Site

Abstract

Purpose – Firms in Malaysia are in an enviable position in view of Malaysia's standing as a leading outsourcing hub in the region. Despite that, little is known about the accounting outsourcing practices, risks and control in Malaysia. This paper aims to explore the practices, decisions, processes and perception of risks and control in accounting outsourcing. Design/methodology/approach – This paper is written based on survey data which were collected using a questionnaire. The questionnaires were directed to the head of the accounts and finance department of each company. A total of 51 companies participated in this study and approximately 47.1 percent of the respondents are involved in accounting outsourcing. Findings – Findings show that the most common outsourcing activities are financial reporting and auditing while the main reasons to outsource are quality service, core competencies and scale economies. The decision to outsource accounting services is related to the type of industry and expertise in the firms. Most of the firms outsource their preparation of account and audit work as well as tax for better quality services. Firms rely more on formal contracts and concerns about confidentiality and security of accounting data. Research limitations/implications – Because of the limited number of responses, the findings may not be generalized to the overall population. Nevertheless, they can be used as background information for subsequent research in accounting outsourcing activities. Future research may consider the use of in‐depth case studies for understanding challenges in accounting outsourcing particularly in making decisions, managing processes and mitigating risks. Originality/value – While it can be regarded as exploratory, this study makes an attempt to uncover the risks and control issues in accounting outsourcing. The findings will contribute to the body of knowledge in accounting outsourcing and enhance the understanding of the current accounting outsourcing practices in Malaysia.

Journal

Journal of Asia Business StudiesEmerald Publishing

Published: Jan 13, 2012

Keywords: Accounting; Outsourcing; Malaysia; Decision making; Process; Risks; Control

References