Offshoring Accounting: A 7-Step Guide to Ensure US Compliance

Offshoring finance and accounting tasks has become a common practice for many accounting firms in the US seeking to cut costs and improve efficiency. However, offshoring also presents a significant compliance risk, particularly when it comes to US regulations and standards.  

As accounting firms are held to a higher standard of regulatory compliance than other businesses, it is important for them to take additional steps to ensure compliance. That’s why I collaborated with my team at Finsmart Accounting to share actionable steps to do the same.  

Ensuring compliance while offshoring  

CPA and accounting firms in the US should keep in mind the following 7 steps when offshoring finance and accounting tasks: 

# 1 Maintain Confidentiality and Data Security 

As accounting firms handle sensitive financial information, maintaining confidentiality and data security is critical. CPA and accounting firms should ensure that the offshore service provider has appropriate data security measures in place, such as firewalls, encryption, and secure data centers. Companies should also establish clear protocols for the handling and transfer of sensitive financial data. In addition, firms should ensure that the offshore service provider complies with all relevant privacy laws and regulations, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). 

# 2 Ensure Compliance with AICPA Guidelines 

The American Institute of Certified Public Accountants (AICPA) provides ethics guidelines for offshoring accounting services. CPA and accounting firms should ensure that the offshore service provider follows these guidelines, which include maintaining independence, complying with the AICPA Code of Professional Conduct, and ensuring that the work is performed competently. Firms should also ensure that the offshore service provider is licensed and registered with the appropriate regulatory bodies in their home country. 

#3 Verify Compliance with SOX and SEC Regulations 

CPA and accounting firms are subject to additional regulations, such as the Sarbanes-Oxley Act (SOX) and Securities and Exchange Commission (SEC) regulations. These regulations require firms to maintain accurate financial records and provide assurance on the effectiveness of internal controls. Firms should verify that the offshore service provider complies with these regulations, including providing assurances on internal controls, maintaining audit trails, and ensuring that financial records are accurate and complete. 

#4 Establish Clear Communication Channels 

Effective communication is essential when offshoring finance and accounting tasks. CPA and accounting firms should establish clear communication channels with the offshore service provider, including regular reporting and feedback mechanisms. Firms should also ensure that their offshore team has a clear understanding of US regulations and standards, as well as AICPA guidelines. 

Read on to discover 3 steps to ensure compliance with US regulations and standards while offshoring finance and accounting! 

# 5 Conduct Regular Audits and Assessments 

CPA and accounting firms should conduct regular audits and assessments to ensure ongoing compliance with US regulations and standards, as well as AICPA guidelines. These assessments should include a review of the offshore service provider's compliance with applicable regulations and standards, as well as an assessment of data security and privacy measures. Firms should engage an independent auditor to conduct these assessments and provide recommendations for improving compliance. 

# 6 Provide Ongoing Training and Support 

Ongoing training and support should be provided to the offshore team to ensure that they remain up to date with US regulations and standards, as well as AICPA guidelines. CPA and accounting firms should provide regular training on topics such as data security, privacy, and compliance with US regulations. Firms should also ensure that the offshore team is trained on the firm's specific processes and procedures. 

# 7 Have a Plan for Non-Compliance 

Despite best efforts, non-compliance may occur when offshoring finance and accounting tasks. CPA & Accounting firms should have a plan in place to address non-compliance, including clear protocols for reporting and investigating potential breaches, as well as a plan for addressing any resulting legal or reputational risks. This is really important if by any chance non-compliance with US regulations and standards happens while offshoring finance and accounting! 

Connect for Accounting Offshoring Support 

Finsmart Accounting with its 15 years of outsourced accounting space uses its own proprietary framework called DPPT - Definition, Process, Precision & TAT that has been the success mantra for supporting the firms in the US to stay ahead of the competition. 

By partnering with an experienced offshore bookkeeping services provider in India like Finsmart Accounting, CPA firms can access a team of professionals who are knowledgeable about the latest technologies, up to date with ever-evolving accounting norms, and also domain experts in US accounting.  

Share your thoughts 

Would you like to know more about managing risk effectively to grow your accounting business or CPA practice? Start the conversation below or check out recent blogs I have contributed on offshore accounting.