The results of a recent survey conducted by employment placement agency, Robert Half Management Resources, reflect that more and more CFO’s are trying accounting outsourcing of their services to project specialists and consultants. The survey was participated upon by 1,000 CFO’s whose answers were compared against results in a 2013 survey.
61% of the survey participants gave the nod for outsourcing business systems and performance improvement. This is a huge leap from the 48% result in 2013. Apparently, companies are relying more and more on consultants to oversee the effectiveness of their current business models and system processes.
Risk, governance and compliance see a 10% rise at 50% from the 40% it garnered from the last survey, and there is a 13% increase for CFO’s outsourcing finance optimization which only had a 36% votes in 2013.
Consultants are tapped ensure that there is value being brought in from the companies’ financial investments.
New Outsourcing Guidelines
In light of these development, Cayman Islands Monetary Authority (CIMA) has issued outsourcing guidelines to regulate and ensure the protection of the businesses within the industry from breach, losses and damages derived from failed outsourcing arrangements.
The regulations cover various assessments, from a framework basis to the capacity of the outsourcing providers to deliver as required.
Here are some of the points that you need to understand about the new guidelines that CIMA issued:
- Rectification of deficiencies found in the outsourcing arrangement must be completed by August of 2016. CIMA has established a standard management framework which will serve as basis for monitoring of outsourcing.
- Management oversight failures are not to be delegated. Many of material functions that had failed are usually caused by management oversight. CIMA imposes that such areas must not be delegated for outsourcing functions and must be handled at the same level as the oversight and accountability.
- Assessment of the financial impact of a failed outsourcing arrangement on the business. CIMA requires that an assessment on the possible damage and losses caused by failure to deliver at a given period of time on the part of the outsourcing service provider must be performed.
- Assessment of the capacity of the outsourcing service provider. Is the BPO company capable of managing and maintaining internal controls? Do they have the capacity to meet the requirements and regulations imposed by CIMA.
- CIMA may impose additional requirements when needed. This will be based on the assessment of the regulated entity and the possible negative impact on the company should the outsourcing agreement fail through.
- Drafting and reviewing of the terms and conditions of an outsourcing agreement. This also includes regular reporting and monitoring of the implementation of standards set and the programs that had been approved.
- In-house monitoring of conduct of service provider.
- Preparation of contingency plans. This is in case the outsourcing service provider fails to comply to the agreement. Does the company have a plan B?
Senior Executive Director of Robert Half Management Resources, Paul McDonald, explains in an interview that as the nature of businesses continue to evolve, so do the systems and processes become more complex.
Many of these companies do not have people within their workforce who can handle these areas which is why organizations turn to outsourcing to those who are equipped for the tasks.
CIMA provides underlying support for the industry through regulations that will ensure optimization and success of these outsourcing partnerships.