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Offshore Service Providers - Is it Right? Is it Ethical?

Tuesday, August 29, 2017

Every industry sector is seeking ways to cut costs and with the advent of digitalization, data transfer and the internet even more opportunities present themselves.

Generally, cutting costs requires an investment of time and capital, whereby procedures are reviewed, due diligence is carried out and a re-structure in some shape or form is implemented to facilitate the new cost cutting measures.

However, outsourcing accounting, taxation and audit services to offshore service providers requires minimal investment of time and minimal re-structure. This provides an immediate financial advantage stemming from engaging in a different economic, employment, social and welfare environment applying to developing third world countries that are offering these discounted services.

The Question is:…..IS IT ETHICAL?

One of the most significant shifts in the accounting and audit profession over recent times is the measuring and reporting of social and environmental issues within the reporting framework of both accounting and auditing standards, mostly brought on by community expectations. Disclosing entities now have a statutory social responsibility to report on their global social conduct.

International companies in response to their new accounting and reporting obligations are reviewing their supply chains from third world developing countries to ensure they are not engaging, promoting or relying on them.

The sub-standard supply chains refer to “Sweat Shops” or similar, whereby individuals are exploited, overworked and underpaid, function in adverse work conditions, are subject to harsh management recriminations and purely exist as pawns for business operators to maximize profit with no accountability for their conduct. This is further exacerbated by limited or no government policies with regard to employees rights, employers obligations, welfare provisions, fair work policies etc

It is unfortunate and disappointing that the “accounting profession/industry” as a whole has been so smitten with this new “cash cow” and the fact that we can, that no one has asked the question….“should we?”

The growth in the use of offshore service providers by the accounting, tax and audit sector has been significant, as the accounting industry recognizes the cost savings and how this translates into increased profits and greater market share…. but at what cost???

By utilizing offshore services you are engaging, promoting and exploiting sub-standard service industries in third world developing economies that have deficient employment practices and policies. In essence, you are promoting the regimes that profit from unfair employment practices.

Furthermore, by transferring the work offshore you are denying the employment of professional people in Australia who are not only better equipped to deliver a professional outcome, but are engaged within the auspices of fair work / fair pay policies with robust government protocols protecting both employees and employers.

Hopefully it is only a matter of time before the Australian accounting profession takes a good hard look at itself and realizes its’ social responsibility and transparency that it helped pioneer and implement will raise its collective conscience and the unsolicited engagement of offshore service providers will be a thing of the past.

At HTG Partners all accounting, taxation and audit work is carried out by resident qualified professional accountants and auditors. We therefore guarantee both the confidentiality of all client information, but also the quality of our work.

More importantly we engage, promote and rely on the professional individuals who make up part of the Australian workforce.