An audit is one of the most complex analytical tasks in the accounting world. It requires a great deal of knowledge and responsibility on the part of an auditor to vouch for the quality, relevance and authenticity of a client’s financial statements based on appropriate evidence. Thus, auditing is not only a cumbersome job but also high-cost and time-intensive at the same time, massively involving the element of risk and prompting CPAs to opt for audit support services.
One of the most effective solutions for accountants and CPA firms to make their audits hassle-free is to outsource professional audit support services. Outsourcing not only helps get the job done without recruiting additional staff but also keeps the ever-growing recruitment and overhead costs in check.
On this page, you will find all the information you need to understand the significance of compliance and audit support services in the success of a CPA firm.
Audit services refer to the services provided by an external auditor to review and assess a firm’s financial statements or services. The auditor typically evaluates the statements and reports for their authenticity and correctness. There are various types of audit services such as financial, compliance, operational, performance, IT, system security, due diligence, etc. On this page, we will solely refer to financial audit services provided by external auditors.
Audit support services are often confused with audit services but are not the same. While audit services refer to the services provided by an accountant or CPA to a business firm, audit support services refer to the comprehensive support and guidance provided by an audit support specialist to these accountants and CPAs.
Audit outsourcing services are designed for CPA firms conducting external audits for client firms. These firms often struggle with insufficient, unskilled or overused staff and fail to deliver quality work or meet deadlines. By outsourcing audit work, these firms can outsource their stress to professional remote auditors, who provide complete support and guidance and make audits hassle-free.
In simple words, audit services refer to professional services provided by CPAs to client firms, while audit support services are meant for CPA firms to outsource their external audit workload.
An internal audit refers to the audit procedure carried out within an organization, wherein the auditors assess the processes and functions within the company. This is particularly important for larger organizations with complex processes and operations.
An external audit, on the other hand, refers to an audit of financial statements and reports of a corporation by an independent auditor. This audit is highly critical and risk intensive. It is carried out by all firms, irrespective of their size, through a professional external auditor.
Internal audit is a year-long and continuous process, whereas external audit is carried out only once a year by an external auditor. Further, while a firm’s in-house team carries out an internal audit, an external audit is usually handed over to a third-party onshore or remote auditor for an efficient and unbiased opinion.
Audit outsourcing companies offer different types of audit support services to clients, right from external audits to IRS tax audit support. These companies employ highly proficient auditors and train them on global audit regulations so that they can seamlessly blend into the clients’ work system. The auditors take care of the clients’ end-to-end audit functions in three phases- planning, execution and completion.
During this process, the client can remain carefree about the entire function and rely entirely on the expertise of the outsourced audit support specialist.
Once the audit is complete, it is thoroughly scanned for accuracy and only then is it handed over to the client.
As a part of the contract, audit outsourcing companies maintain complete transparency and accountability of their resources’ work. All the reports and timesheets representing the remote auditors’ productivity are regularly shared with the client so that the latter can be assured of the quality and capacity of their work.
When it comes to auditing outsourced services, many CPA firms remain reluctant. This is mainly because several accountants have harbored certain misconceptions about compliance and audit support services for years. Moreover, considering the amount of risk involved in the audit job, some CPAs ditch the idea of outsourcing their clients’ audit tasks.
However, most of these notions are mere myths and need to be busted to be able to look through the advantages of outsourcing.
For instance, some CPAs believe that audit support services are unreasonably expensive, and their firm could do without them. But it is a proven fact that outsourcing audit work is highly cost-effective and a proven way for businesses to increase their capacity to scale, irrespective of the sector. When CPAs outsource professional audit support services, they can significantly cut down on the overhead costs of hiring and training resources and building office infrastructure while still ensuring that the work is done efficiently.
Some accountants also question data security aspects when outsourcing audit support services. It is a matter of fact that reliable audit outsourcing companies keep data security and protection at the core of their business and comply with essential security standards to ensure that their clients’ data remains safe and secure.
Outsourcing is great, yes, but an important question that needs to be answered is- When should CPAs outsource audit support services? How do firms determine if it is the right time to outsource their clients’ audit requirements? Let us answer that for you.
The accounting industry in the USA has been facing quite a few challenges over the last few years, especially with respect to staffing gaps. To add to it, the era of the Great Resignation has made things worse. It is, therefore, a challenge for CPAs, especially small and mid-sized firms, to find skilled accountants and hire auditors who can take care of their audit services. Moreover, the industry also faces the challenge of incompetent resources, redundant methods, outdated technological expertise and much more.
This is where audit outsourcing services come into the picture. Outsourcing audit work to a trusted outsourcing partner gives you access to experienced audit professionals and frees up your existing staff to take up additional, value-based tasks.
Also read: Why Outsource Professional Audit Support Services?
Once you have decided to outsource audit support services, the next important task is to find the right outsourcing partner. This is crucial for a firm as its success, profits and productivity depend largely on the outsourcing service provider. While the right partner can significantly fuel your profitability and scalability, the wrong firm can mess up the entire task and put your reputation at risk.
There are several audit outsourcing companies in the market out there. To choose the right partner for their firm, CPAs must consider the core factors of quality and experience. As a client, you would want only top-notch compliance and audit support services to gain your clients’ trust. When a firm has considerable experience, it is more likely to be proficient in its services. CPAs can ask outsourcing firms for references and speak to them first-hand about their experiences.
Another indication of a firm’s expertise is the awards and accreditations won by them. CPAs may look for client testimonials on the firm’s official website or client platforms to gain insight into their experience and knowledge.
Data security is the next vital factor to consider while picking the right outsourcing partner. Most good firms providing audit support for CPAs have a robust system for ensuring complete client data security and compliance with global security standards.
When it comes to outsourcing external audits or IRS tax audit support, outsourcing is the quickest and easiest way for accounting firms to scale and achieve profitability while keeping the growing costs in check.
Let’s look at some of the advantages and disadvantages of audit outsourcing services.
Experienced professionals: Outsourcing compliance and audit services with top-tier outsourcing companies gives CPAs access to highly skilled and trained audit support specialists, thus beating staffing challenges.
Cost savings: Audit outsourcing services fuel massive cost savings by keeping the overhead costs in check, thus driving profitability.
Technological proficiency: A significant advantage of outsourcing audit support for CPAs is that firms can easily integrate the latest technology into their processes. This particularly is a challenge for several small-scale CPA firms as the accounting industry struggles to remain updated with the ever-changing technology.
Higher scalability: Another primary reason CPAs outsource professional audit support services is that it increases a firm’s capacity to scale. In today’s competitive world, CPA firms must offer a wide range of services and add to their client base to scale effectively. Outsourcing is a sure-shot solution for accountants and firms to ensure higher scalability.
While the advantages of auditing outsourced services outnumber the disadvantages, it is important for firms to consider these in order to be aware of the whole scenario.
Communication woes: One of the most common disadvantages of outsourcing compliance and audit support services is that it leads to a tricky communication channel. CPA firms may find it difficult to effectively communicate their clients’ requirements to the outsourcing partner and vice versa. The tricky communication channel may sometimes lead to a loss or manipulation of critical information, thus posing a risk to the final audit report.
Data security: Another major concern for CPA firms is data security. Auditors deal with a lot of sensitive financial data of clients. When accountants outsource audit support services, they give the outsourcing firm access to their clients’ sensitive and confidential data. While most outsourcing firms treat data with utmost privacy, even the slightest error in the system can cause a leak and thus put your client’s data at risk.
In order to minimize the risks associated with audit support outsourcing, CPA firms need to be highly diligent while choosing their outsourcing partner. It is essential to conduct thorough research and analysis before signing the contract with the final one.
An accountant or firm may recognize the gaps in their processes and opt for outsourcing audit work to ensure better efficiency. However, the task does not simply end there. You might be confident about your exact requirements, but there are other essential factors that CPAs must consider before signing the contract with the outsourcing firm.
It is true that audit outsourcing companies take care of your clients’ end-to-end audit processes, but it is vital to assess the pros, cons and impact of outsourcing on your firm beforehand. Here are a few points that accountants must consider.
The volume and nature of work: Before you consider going for audit outsourcing services, it is essential to consider the volume and nature of your work. Not every firm has the same amount of work or clients. Besides, the nature of audits varies from client to client. In addition, not every audit needs to be outsourced. Your internal team may be capable of managing some clients, while you would need outsourced resources for certain other clients.
For this reason, CPAs must do a thorough internal analysis to determine their needs before approaching an outsourcing partner. This will also help the outsourcing partner develop the right pricing and engagement model for you.
Interim SWOT analysis: A SWOT analysis is the most realistic measurement of a firm’s standing. It helps determine the businesses’ strengths and weaknesses and growth opportunities.
It is recommended that CPAs conduct an interim SWOT analysis before approaching an outsourcing partner or requesting a pricing quote. Through this exercise, firms can effectively determine the exact number of resources they need to fill their team. It would also help ascertain the total work hours, which is a crucial parameter to outsourcing compliance and audit support services.
Competitor analysis: A thorough competitor analysis is an excellent way for any firm to understand their business challengers. It helps devise and implement counter-strategies and innovate and retain one’s spot in the market.
CPA firms need to conduct a detailed competitor analysis to understand the gaps and areas of improvement within their firm. This can be extremely helpful in determining if a CPA firm needs to add new services to their existing offerings and how much work they should outsource in order to scale the firm.
Outsourcing budget: This one is probably the simplest but also the most crucial of all the factors. Before a CPA firm decides to outsource their clients’ audits, the management needs to be certain about the available budgets and the amount they can invest into outsourcing.
Remember, outsourcing is supposed to be an investment and not a liability. If you do not have enough budget to add outsourced auditors to your team, it probably isn’t a good time for your firm to widen its horizons and team up with new clients.
Like any other investment decision, CPAs must consider all internal and external factors that may affect their firm’s market standing and end profits before choosing to outsource professional audit support services.
By now, we all know that accountants can fuel growth and profitability for their practice when they outsource professional audit support services. But how much does it cost to outsource these services?
The pricing models for audit outsourcing services vary from company to company and depend largely on factors such as the volume of the work and the reputation of the outsourcing partner. Several audit outsourcing companies customize their pricing models based on their clients’ requirements. To suit their clients’ diverse needs, these companies devise flexible pricing and engagement models, each with pros and cons.
Let’s look at two of the most common pricing models offered by audit outsourcing companies.
The Full-time Employee (FTE) pricing model is the most common and widely preferred model for audit outsourcing services. As the name suggests, the FTE model offers CPAs a dedicated full-time resource who works exclusively for them. The outsourcing company typically bills the CPA firm monthly against the resources’ time.
The FTE model is an excellent choice for firms with a high and consistent volume of work.
Here are some of the pros and cons of this engagement model.
The ad-hoc model for compliance and audit support services is specifically designed for companies that do not have large volumes of work or many clients. In this model, CPA firms opt for professional auditors on an ad-hoc basis as and when they receive work from their clients. The outsourcing company designs the payment structure accordingly, wherein the CPA firm is billed for the resource on an hourly basis.
Here are some of the pros and cons of this model.
When it comes to audit outsourcing services, there are several companies and their corresponding engagement models to choose from. CPA firms must be sure about their exact requirements and choose a provider that best fits their need.
QXAS is a global outsourcing company specializing in dedicated audit support services for CPAs. Our team of highly professional and experienced auditors works dedicatedly for your firm so that you keep your clients happy and satisfied at all times.
QXAS is the accounting outsourcing division of QX Global Group, one of West India’s fastest-growing accounting outsourcing companies. We began our operations as a mere 5-member startup in 2003 and have grown to be market leaders in accounting outsourcing. We have built a robust team of knowledgeable professionals that helps individual accountants and small and mid-sized CPA firms to outsource professional audit support services for improved cost savings and maximum profitability.
QX thrives upon the core values of Quality and Excellence. We exhibit these principles in every project we undertake and have been instrumental in helping CPA firms manage their audit services better.
Our commitment to excellence was reinstated in 2022 when QX earned a 100% score in all audits conducted by the British Standards Institution (BSI). We are proudly an AICPA SOC 2, ISO 27701, ISO 27001 and ISO 9001 compliant company.
Apart from compliance and audit support services, our widely-preferred services include accounting and bookkeeping outsourcing, payroll outsourcing and comprehensive tax support.
There are several reasons why QXAS can be the ideal audit outsourcing partner for your CPA firm.
To learn more about our services, call +1 862 946 6565, drop us an email at [email protected], or log on to Outsourced Accounting, Bookkeeping, and Payroll Services | QXAS USA (qxaccounting.com).
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