Outsourcing Driven by Dearth of Accountants

Accounting Technology sees strong growth in tax return outsourcing. Some believe it would be even stronger without the new AICPA ethics rules, which, among other things require disclosure beginning July 1, 2005 (see

http://www.aicpa.org/download/ethics/2004_1028_outsourcing.pdf http://ftp.aicpa.org/public/download/news/ftc.doc http://www.aicpa.org/pubs/cpaltr/feb2004/guidelines.htm)

One of the driving forces behind tax preparation outsourcing is the difficulty in finding temporary personnel during tax season. 

Outsourcing still provokes controversy with many firms fearing their clients’ reactions.  There also are questions of security of data, skill of the preparers, loss of domestic jobs, and doubt on the question of cost savings. But according to the Accounting Technology article, Gary Boomer, of Boomer Consulting in Manhattan, Kansas, believes the security in Indian firms he has visited is stronger than in the United States, and many of their preparers have better training.

Some firms contemplating outsourcing were reassured when they found that the Indian tax preparers were denied access to pens and paper, the Internet, or telephones, and that they were not permitted to bring backpacks or purses to the office.

Representatives of outsourcing companies told Accounting Technology that savings are often underestimated because firms do not consider the additional payroll they would have had in tax season. Tax outsourcing can also increase volume because of improved service and turnaround time,

While firms outsourcing fewer than 100 returns do not realize the full benefits, sole practitioners are the biggest winners. Some firms test the waters by sending a few returns to an outsource company.

On the other hand, improvements in tax preparation software are a more significant factor this tax season. The improvements cited are: “new interfaces,” better documents,” “Web features,” “electronic organizers,” “increased support,”  “integration,” and “easier administration.” 

The article includes a list of tax preparation software vendors:   

For the complete article, see Accounting Technology, January 2005,

http://www.webcpa.com/article.cfm?articleid=10146&;pg=acctech