Advantages and disadvantages of outsourcing accounting services in Australia

This article discusses the advantages and disadvantages of outsourcing accounting services in Australia. It covers the reasons for outsourcing, effectiveness and limitations of outsourcing, and the environment of business accounting service practice in Australia.

Running head: ACADEMIC & BUSINESS RESEARCH
Academic & Business Research
Name of the Student
Name of the University
Author Notes

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Table of Contents
Introduction:...............................................................................................................................3
Project objectives:......................................................................................................................3
Project scope:.............................................................................................................................4
Literature Review:......................................................................................................................4
Requirement of accounting service in different sector:..........................................................4
Reason of outsourcing practice in Australia:..........................................................................6
Effectiveness and limitation of outsourcing activity:.............................................................8
Environment of business accounting practice in Australia:.................................................10
Conclusion:..............................................................................................................................11
References:...............................................................................................................................12
Appendix:.................................................................................................................................15

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Advantages and disadvantages of outsourcing accounting services in Australia
Introduction:
In business administration the department of accounting provides the scope to
maintain book of earning and expenditure to identify the possible profit or loss. The
processes of the huge task are controlled by a group of individuals having effective skills to
prepare the book for every private or public sector. Introduction of the outsourcing eliminates
the scope of domestic market to improve the environment of a firm. Moreover, accounting
service is a very necessary activity in a business to maintain its financial stability and regulate
the earning of revenue in a viable manner.
Financial resource helps a country to secure its favourable environment to meet up
needs of different class of individuals. In this project critical discussion over the outsourcing
practice of accounting service in Australia is going to be performed. In order to achieve the
aim of the research objective and scope of the study has been mentioned to conclude the
study in an effective manner.
Project objectives:
Objective of a project is an important factor that provides a typical guideline to reach at
the aim of the research. In this study the environment of Australia has been focused to
calculate the advantage and disadvantage of outsourcing of accounting services from the firm
to the other countries. Hence, in order to conduct the study some objectives are framed
below:
 To understand the reasons for the outsourcing practices in Australia
 To identify the reasons of accounting services in Australia

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 To recognise the limitation and effectiveness of business in Australia in the business
environment
Project scope:
The advantages and disadvantages of outsourcing accounting services in Australia has
a multiple possibility to offer a number of future researches to refer the view of the author in
their study. Reference of the study in the concept of outsourcing and its application in
different sectors and the impact of accounting and level of service available in different
countries will help to develop general knowledge on the topic.
Literature Review:
Requirement of accounting service in different sector: (Advantages and disadvantages)
A variety of reasons develop the requirements of accounting services in different
business sectors. At present skill and talent in a business organisation induces the chance of
its success that can enhance the potentiality of management. In this context Krstic and
Kahrovic (2015) mentioned that relationship between time and money in finance
administration motivates the performance of an organisation to influence the success of a
business. From health care to the banking and from manufacturing to retail in every place the
requirement of accounting allows the companies to provide upgraded services. Calculation of
book keeping depends on the accounting formula and the proper illustration of balance sheet
ensures the ultimate growth of an organisation followed by its day to day activities.
Business plan:

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Development of business plan is dependent on the accounting practice performed in
an organisation. Bauer (2017) stated that revue, purchase and expenditure comes under the
business planning activity in which requires the identification of the pathway to fulfil the aim
in a potential manner. Start up business remains in a raw state and proper business planning
followed by the rate of expenditure and profit are calculated considering the accounting
practice. In a business environment market fluctuates and such fluctuation in economic
environment potentially insists the formulation pattern of the business plan from different
aspects. On the contrary Lee (2016) mentioned that in a business plan the structure of an
accounting firm is a major necessity that determines the scope of a successful business plan
higher than the existing organisation in a competitive environment. Inclusion and exclusion
of the planning of the resources depends on the accounting process that plays an important
role.
Support and funds:
Financial support in a business organisation highly matters as it helps in the
development of its stock and also helps in the process of promotion. In this context
Mohammadi et al. (2015) stated that segmentation of financial resource from the available
fund induces the effectiveness of a business practice and provides fluency. On the other hand
in the international business practice funding and support helps to control the economic
environment followed by accounting. Support of accounting in funding facility influences the
business practices in a significant manner. Accounting helps to determine the possible funds
to conduct supporting activity in case of any emergency to retain the sustainability of an
organisation.
Marketing plan:

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Marketing is an essential practice in a business activity for which allocation of
financial resources enhances the scope to improve the condition of business. In a marketing
plan expenditure for promotion and presentation of a goods along with the communication
practice are calculated under the accounting facilities. In every business sector marketing
plan is based on the capability of finance and such capability can be identified through the
accounting process. In marketing plan development product, price, place and promotion are
considered together and each of the process requires fund that is dependent on the accounting
process. As per the view of Grabara and Kot (2017) segmentation of the fund for different
area of marketing mix induces the scope of a business.
State licence requirement:
In order to receive state licence a formal structure of accounting of an organisation is
required based on which licence is generated. Guarda et al. (2015) opined that business
licence provides the permission to earn revenue by exhibiting the effectiveness in serving the
market or society. Accounting helps to formulate the tax payment sheet that helps a country
or organisation to obtain a clear view of the earning of GDP. Education and skill of an
individual helps to perform accounting for an organisation to make the credit and debit
section appropriate to settle the balance sheet for the identification of proper function of
financial investment in a business (Vining and Globerman, 2017).
Hence, the four reasons generates the requirement of accounting service in different
business sectors to stabilise the financial regulation followed by a formal book keeping as
accounting.
Reason of outsourcing practice in Australia: (Advantages)

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Outsourcing is a process that enhances the task of an organisation by balancing the
structure of its efficiency and potentiality of goods and services. Espino-Rodríguez and
Rodríguez Díaz (2017) stated that outsourcing is practiced by a country to input the best input
in any kind of project to uplift its quality in the market. It has been found that the price of a
product and its manufacturing cost sometimes remain higher in a country that restricts its use
in a production. Hence, organisations perform outsourcing to get budget service or goods
from other country to fulfil their aim. Grabara and Kot(2017) stated that collection of budget
for the goods or services through the process of outsourcing influence the revenue of an
organisation to achieve its expected profitability. In Australia the price of a product and its
manufacturing cost sometimes remain higher than the other developing countries. Moreover,
the act of earning foreign location enables the firms of the developing countries to provide
their service at a lower cost in comparison to the Australian domestic market. Therefore
demand of the outsourcing develops in the environment of Australia to promote the success
of business. On the other hand, Goldschmidt and Schmieder (2017) mentioned that to reduce
the pressure from a critical project outsourcing of the partial goods or services are performed
by an organisation to maintain tight focus on the primary project. Such practice secures the
time to invest on the highly critical task to make it perfect. Economic stability of a country
allows it to purchase service from other country in a smooth manner. Skill and potentiality of
a service provider only matter when it is effectively applicable in the environment of the
business of a particular organisation (Liu and Tyagi, 2017). It helps to get the organisation to
control the financial budget and it also helps them to reduce expenditure on accounting and
the training of the organisation that can enhances the market of the firm.
Outsourcing increases the knowledge of companies which is significant to expand the
scope of business in a multinational context. Outsourcing also helps to identify the capability
of an organisation to develop their circle by exploiting their financial resource. In this context

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Gentry and Shirazi (2015) stated that outsourcing makes a country promoted from its own
resources and allow them to increase the value for future utilisation. Outsourcing is a strategy
of an organisation to hold and consume the cost effective resources both goods and services
to make their business more dynamic and profitable. Internal shortage of resources and price
of the resource along with quality makes a country to perform outsourcing in order to make
their service more effective from different aspects. Risk mitigation occurs by outsourcing
because lack of presence of manufacturing environment and ability to handle human resource
for quality manufacturing practice. Hence, outsourcing develops the chance to reduce the risk
factor of on time supply of the partial goods and services that can change the environment of
the organisation. On the other hand Goode et al. (2015) commented that in order to develop
relationship with the organisation of other countries outsourcing helps to obtain the expected
objectives for the success of the business practice. It has been observed that delegation of a
task to other organisation followed by outsourcing process induces the scope of an
organisation to increase the wings of their organisation by enhancing their potentiality too.
Effectiveness and limitation of outsourcing activity: (Disadvantages)
Effectiveness of outsourcing makes the project work of an organisation perfect for the
process of the accomplishment of their project. In this context Lueg and Knapik (2016) stated
that a wide range of effectiveness of outsourcing activity has been detected which influence
an organisation to consider outsourcing under the business practice. Orientation of the expert
in the formulation of goods and services generates the scope of developing quality in an
organisation. Collection of the expert and their skill implementation in the organisational
practice to fulfil the demand increase the potentiality of a dependent firm. It is beneficial
from both the aspects to satisfy the organisational goal of productivity and profitability.

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Wang and Zhou (2016) stated that as an advantage outsourcing enables the organisation to
focus on a particular matter that influences them to concentrate the skills within an
organisation to promote its potentiality. In a business increasing the responsibility of a variety
of task generates the chance of the mitigation of the possible risks. Therefore, outsourcing
divides the risk factors or enables to mitigate it for the potentiality and image development of
an organisation. Cost reduction of a good or service takes place because of the outsourcing
(refer to appendix). In case of resource availability in a market an organisation it enables the
organisation to accomplish product requirements in an easy way. On the other hand Berber
and Slavić (2016) stated that the presence of effective skill increases the cost effective
production which is collected by the organisation of organisations. Simplification of the
project work and work all round the clock is possible because of the outsourcing. It has been
found that at a time an organisation is unable to focus on two or more different types of
management of production activities. Hence, provision of responsibility of a part of task to
another company simplifies the entire project and its handling process reduces the chance of
failure to serve effective result. In this context Lehdonvirta et al. (2014) stated that
relationship development and obtaining the targeted ideas possible through the outsourcing
which is beneficial for expansion of business practice and sustainability of an organisation.
As there are a number of advantages present in outsourcing, disadvantages are also
there to downturn the level of potentiality of a business. Due to the delegation an
organisation losses its control over the entire project that results the intervention of other
organisation in the particular project. The authors Clark and Urwin (2017) are of the opinion
that due to the lack of assessment of the outsourced organisational environment chance of
security downturns. Hence, risk factors develop in the environment to regulate the condition.
Quality control is not possible always because of the lack of observation of production unit of
other company. Lacking in matches in the unit of production affects the high demand of the

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outsourced materials in the ultimate project. Financial budget segmentation takes place in
such cases that develops the burden to the outsourced firm. It affects the fluency of the
business from different aspects. As per the view of Lacity and Willcocks (2017) risk
regulation helps an organisation to obtain and sustain the dynamic nature to make an
organisation successful. Another issue of outsourcing is the loss of the outsourced materials
during the time of translation. Focus is very much important in a business which is regulated
by the implementation of the outsourced product. Barrier of a practice is very much harmful
to destroy its entire setting from different aspects. Limitation of the outsourcing process
increases the obstruction in a business activity from different side. An organisation
outsources raw materials, machineries and administration service such as accounting finance
etc. Lack of sharing and understanding of the suitable skill of the organisation sometimes
hamper the expected outcome of the organisations that hamper the potential effect of business
from the core of the setting. However, due to the absence of proper planning a reputed
organisation failed to serve effective skilled service to regulate the organisational practice.
Environment of business accounting service practice in Australia: (Advantages)
Australia has a potential business environment and performs advance culture of
business practice to achieve the highest profitability. As per the political and economic
environment of Australia fluent intervention of the people increases the organisation to
conduct outsourcing. Wachira et al. (2016) affirmed that the accounting service of Australia
is very much costly because of the extraordinary skill of the accountants. On the other hand,
the requirement of accounting by an organisation sometimes is unable to afford the service.
The high skill service is not necessary always to make the book of an organisation
productive. Simple accounting method and book keeping in a cost effective manner induce
the scope of an organisation to reduce their unnecessary expenditure. Therefore, the trend of
accounting outsourcing by Australia results the situation downturn of the utilisation of

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domestic accounting service. In Australia a number of accounting service providers are
present but the faith and loyalty between two outsourced firms keep the relation on for cost
effective business. In this context Sampaio and Bernardino (2016) mentioned that knowledge,
experience and critical condition handling feature are effectively found through outsourced
practice of accounting. Hence, comparison between the domestic and outsourced service the
organisations most of the time rely on the outsourcing practice to develop the potential book
formulating practice of the firm. Accounting is required for various purposes in an
organisation to achieve the expectation level. It has been observed that due to the fluent
economic condition the people of Australia do not negotiate with the fee of accounting.
However the potentiality of the outsourced service is quite higher than the domestic service
of Australia. On the other hand Dinu (2015) stated that the intervention of Foreign Service in
the Australian market downturn the demand of the domestic service for the internal growth.
Due to technological advancement Australia enable to maintain relationship instantly through
the technology. Hence the intervention of technological bridge between two companies and
level of loyalty increase the scope to upraise the environment of the organisation.
Conclusion:
It can be concluded that Australia outsources the accounting service for personal
benefit. Followed by different reasons for outsourcing and environment of the accounting
practice in Australia reflect the advantages and disadvantages of the practice. Different views
of different author are mentioned in a critical manner is the project to understand the general
knowledge on the outsourcing of the organisation. It has been observed that the view of
different authors and the contrast of the ideas make the research effective to understand the
importance of outsourcing for the business environment of Australia. However the impact of
the environment over the accounting practice and process of outsourcing of Australia is very
much crucial to deal with the market for the ultimate efficiency.

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Guarda, G.F., Oliveira, E.C. and Sousa Júnior, R.T.D., 2015. Analisys of it outsourcing
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Vining, A.R. and Globerman, S., 2017. The outsourcing decision: a strategic framework.
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Appendix:
Figure Outsourcing save cost of business
Source: Rsmus.com, 2017