Outsourcing a certain department of an organization didn’t actually become a trend until the Industrial Revolution. Organizations start outsourcing their time-consuming repetitive areas on the grounds that production rates get expanded quickly and they require assistance, which drove numerous to consider what else could be outsourced.
Every business wants to save their money and get accurate results in less time. For this purpose, offshoring is one of the ideal approaches. Lately, most organizations like to outsource some part of their business offshore to profit from the various benefits related to offshoring like – reduction of expenses. With such expanded development of offshore outsourcing, different sorts of outsourcing models have begun their journey into the market.
Global Shared Work Model
It is a collective methodology that includes designating or incorporating a subset of the business department to another and separate, semi-self-ruling business place. The global shared services outsourcing model can help the business in many ways, such as:
- Cutting down the expenses.
- More efficiency in the work with no compromise in the quality.
- A better understanding of tasks assigned to the employees,
- Higher ROI
Enhances business values
In Global shared services, you can outsource various accounting and bookkeeping services like – invoice generation, inventory management, payroll processing, and tax filing.
This model is a perfect amalgamation of nearshore, onshore and offshore outsourcing types. It helps in providing the most ideal arrangement that lines up with the necessities and objectives of the firm while limiting the expenses. This model gives admittance to the worldwide abilities of an offshore model. You will also have the local presence of an onshore model.
The hybrid model allows you to perform major client servicing tasks close to the client’s demographic and hiring an outsourcing partner to perform other non-core business activities. You can save a lot of money through this model. For example – Accounting firms hire an offshore outsourcing partner to complete their repetitive bookkeeping tasks and focus on major client satisfaction activities.
In a multi-sourcing model, a business comes into an agreement with different outsource partners to perform major all the activities related to business. Here your in-house team will only be focusing on the major tasks that bring greater ROI.
This model helps in bringing excellent quality to the work as you will outsource the work to experienced and skilled people. For example – In a business, one outsourcing agency will be handling accounting bookkeeping, the second one might be seeing IT-related issues and the third one will be handling customer care tasks.
The benefits of this model are:
- You don’t have to rely on a single vendor.
- More efficient working to meet the client’s needs.
- Experts handle all the different functions of your business.
- One of the biggest disadvantages of this model is that it can be very less flexible and the decision-making processes of your business can be severely affected because of the delay from one side of the outsourcing firm.
Global Delivery Model:
Here the work is divided among different teams who might be working either nearby the client’s location or remotely. The main motive of business here is to get work done easily with accuracy and productivity. Firms use this model to provide customised services to their clients. This model is quite popular in the IT industry. It helps in the distribution of work in a much smarter way to get it completed in a short period of time.
As the pandemic continues, numerous businesses are considering different offshore outsourcing models to lower down the pressure of work. Accounting firms are looking for agencies that can perform their repetitive bookkeeping tasks. Moreover, by outsourcing, organisations can save multiple overhead costs and free up their in-house teams.
Accounting rules in Ireland :- The company law in Ireland states that the directors of companies incorporated in Ireland prepare financial statements for the company in respect of each financial year which gives a “true and clear view”. Such financial statements are either:
- Companies Act financial statements: This is prepared in pursuant with the accounting and disclosure requirements of company law and, principally but not exclusively*, with the Financial Reporting Standards (FRSs) published by the Financial Reporting Council (FRC) in the UK (‘Irish and the UK GAAP’); or
- IFRS financial statements: This is prepared in accordance with the International Financial Reporting Standards published by the International Accounting Standards Board (IASB), as adopted by the European Union.
Under Irish company law, there are certain entities that are permitted to prepare their Companies Act financial statements under a financial reporting framework based on accounting standards other than those issued by the FRC. Specifically, and subject to certain conditions:
- In accordance with section 279 of the Companies Act 2014, pertinent holding companies are permitted to prepare ‘Companies Act entity financial statements’ and/or ‘Companies Act group financial statements’ in agreement with US GAAP, as modified to ensure consistency with the Irish company law.
- Investment companies subject to Part 24 of the Companies Act 2014 or the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 may adopt an alternative body of accounting standards, which are applied in the United States of America, Canada or Japan in preparing ‘Companies Act entity or group financial statements’ or ‘Companies Act entity financial statements’ respectively.
Accounting Regulation Bodies | Accounting rules in Ireland
Its permitted clause (section 8 of the Act), functions (section 9 of the Act) and powers (section 10 of the Act), the Authority’s principal goals are:
- To support and boost public confidence in the accountancy profession through effective, independent supervision and, where appropriate, statutory Enquiry and Investigation;
- To embrace and enhance public confidence in financial reporting through the exercise of efficient, independent supervision and proper enforcement action.
- To reinforce and enhance public belief in the accountancy profession and in financial reporting through the promotion of adherence to high professional standards and the provision of high-quality advice to the Minister; and
- To provide a consistently high standard of service to all stakeholders.
The first financial year of a company is the period beginning with the date of its incorporation and ending on a date no more than 18 months after that date. The next following financial year continues for 12 months by default plus or minus seven days as the directors may determine.
Irish law states that all companies need to prepare an annual audited financial statement which complies with IFRS Standards, with an audit which exempted for dormant companies, companies limited by guarantee, unlimited companies and companies which have specific size criteria. The financial statements that are audited must be approved within nine months of the company’s year-end. The companies need not necessarily use the calendar year. Once approved, financial statements of companies with limited liability status must be filed with the Companies Office, where they are available to the public. Companies who have unlimited status are not required to file their accounts in some circumstances.
Certification and Auditing
In Ireland, the Irish Auditing and Accounting Supervisory Authority (IAASA) is the regulatory body that oversees statutory auditors and audit firms. The approval and registration of accountants is entrusted to the Recognised Accountancy Bodies (RABs) under IAASA’s supervision.
In Ireland, the companies established are required to perform Accounting standards in Ireland activities in pursuant to the legal requirements stated by the Irish Generally Accepted Accounting Principles (GAAP). It becomes essential to perform the accounting procedure with the assistance of Irish accountants, who have proper knowledge of the latest changes that may appear during the years. However, the general principles under which this approach is performed remain the same. Our team of Irish lawyers can assist foreign investors with the legal requirement.
Accounting procedures for small companies in Ireland
The Financial Reporting Council (FRC) is the main statutory body in terms of accounting and a modification in the Accounting standards in Ireland has recently been applied to small companies. Changes in the accounting standard were simplified for the ease of small and micro-companies set up in Ireland. Our Irish attorneys can provide details as the FRC imposed the new regulation as an effect of a European Directive and hence referring it to an Accounting Directive for such entities.
FRS 105 for small companies in Ireland
The Financial Reporting Standard applicable to small companies (FRS 105) represents the implementation of a new accounting standard. The accounting standard is available for small and micro-enterprises under the provisions of the Companies Act. The turnover of the company can be of maximum GBP 632,000 even if the sum of the employees is 10.
The FRS 105 has been applicable since the 1st January 2016 and represents a simplified way to conduct accounting activities and which refers to the presentation of the company’s assets and liabilities.
Business forms can be registered in Ireland
- Private company limited
The Irish private limited liability company is formed by members whose liability is limited to the amount stated by the memorandum of association and to the extent of their initial contribution. It is the most common business form registered, and one founder is mandatory to incorporate this type of entity.
- Public company limited
A public company limited by shares and its shares registered at the Stock Exchange and have no restriction on the number of shareholders. At the disposal of the company, at least 25% out of EUR 38,000 must be paid up at registration
- Companies limited by guarantee
Companies limited by guarantee, such companies don’t have a share capital and are usually set up to provide corporate protection to entities such as sports clubs, charities or trade associations. Every year these companies are required to submit audited accounts at the Companies Registration Office and must have at least seven members.
- Limited liability partnership
In Ireland, a limited liability partnership consists of at least one general partner and one silent partner. Here the partner shouldn’t exceed more than 20 people, and however, if the business operation is related to the banking sector the members shouldn’t be more than 10. The partnership can be incorporated by corporate bodies or by people; however, the general partners are liable for all the debts and obligations of the entity.
- General partnership
It is formed by members with full liability and the same decisional powers in the enterprise. In this, the partners will enter the liquidation procedure, and their personal assets are not protected.
Accounting in Ireland
Proper knowledge and updated information help and support a business to grow internationally. The CPA Ireland is a voluntary membership organization for Ireland’s Certified Public Accountants and is a Prescribed Accountancy Body and Recognized Accountancy Body by following the Companies Act of 2003 (as amended) in Ireland. The foundation is a member of IFAC and Accountancy Europe.
Statements of Membership Obligations (SMOs)
The IFAC member compliance program is the basis of the Statements of Membership Obligations. They serve as a framework and a regulated body and are reliable for high-grade quality professional accountancy, organizations focused on serving the public interest by adopting, or otherwise incorporating, and supporting the implementation of international standards and maintaining appropriate enforcement mechanisms to ensure the professional behavior of their members.
Status of Fulfillment
SMO 1: Quality Assurance
The Companies Act of 2014 outlines that the Irish Auditing and Accounting Supervisory Authority conducts quality assurance reviews for public interest entities (PIEs), and even the six recognized accountancy bodies (RABs) in Ireland— Institute of Chartered Accountants of Scotland (ICAS), Institute of Chartered Accountants in England and Wales (ICAEW), Chartered Accountants Ireland, Association of Chartered Certified Accountants (ACCA) and CPA Ireland and to carry out QA reviews for non-PIEs. QA review program scopes to cover all audits and other assurance engagements. The CPA Ireland reports that it reviews QA Bylaws and guidance to ensure compliance with requirements of SMO 1 and it also carries out annual reviews of its QA system to ensure it meets objectives and reacts appropriately to current economic conditions.
SMO 2 – International Education Standards
According to the Companies Act of 2014 (as amended 2018), the nine stated Accountancy Bodies (PABs) in Ireland share responsibility for initial professional development and continuing professional development requirements (IPD and CPD, respectively) for accountants and auditors. The layout and implementation of educational requirements are overseen by the Irish Auditing and Accounting Supervisory Authority (IAASA). CPA Ireland considers proposed IES requirements yearly and makes submissions to the IAESB. CPA Ireland carries out several upgrades to its IT solutions platform for IPD and CPD, including online profiles, book examinations, availability of exam results, as well as CPD courses, monitoring
SMO 3: International Standards on Auditing
The Companies Act of 2014 (as amended 2018) specifies the applicable incorporating auditing standards, the International Standards on Auditing (Ireland) as issued by the Financial Reporting Council (FRC). The Irish Auditing & Accounting Supervisory Authority (IAASA) specifies auditing standards for use in Ireland under license from the FRC in the United Kingdom. CPA Ireland plays a vital role, in promoting and supporting the adoption of ISA. CPA Ireland annually updates its initial development and continuing professional development requirements to reflect updates in ISA.
SMO 4: International Public Sector Accounting Standards
The government in Ireland is responsible for the adoption and implementation of public sector accounting standards. A remarkable number of CPA Ireland’s members work at senior public service levels. CPA Ireland allocates policy and technical suggestions to members on the public sector accounting professionals, financial management, performance measurement, and related topics via its Members e-bulletin and student’s e-bulletin.
SMO 6: Investigation and Discipline
In pursuant with the Companies Act of 2014, the nine prescribed accountancy bodies (PABs) and the Irish Auditing and Supervisory Authority (IAASA) share responsibility for the system of investigation and discipline in Ireland. On the other hand, each PAB is responsible for the design and implementation of an investigation and discipline system for its members, the IAASA is responsible for the investigation and discipline for public interest entities (PIEs).
Accountancy Profession- Ireland encourages and supports research and development to enhance the profession of accounting and the advancement of knowledge by supporting the professional body. Data shows Ireland is ranked 17th in the World (World Bank IBRD – IDA Survey 2018 of 190 countries) in terms of “ease of doing business” and 7th in the world in terms of ease of “starting a business.” Based on relatable data, of the 140,000 audits completed annually in Ireland, some 138,995 (or 99%) are non-PIE audits. The relevance and proportionality of audit standards are of considerable importance in the Irish economy as the audit process, valuable as it is, consumes entrepreneur resources and therefore impacts on the ease of doing business and economic performance.
The qualification required being a Chartered Accountant (CAI), there are two main routes to entry (a) direct entry after secondary school level education (b) entry after completion of university degree or approved postgraduate program
To pursue Certified Public Accountant (CPA), you can apply through two main routes (a) direct entry after secondary school level education, (b) entry after completion of university degree or approved postgraduate program
THE DIRECT ECONOMIC CONTRIBUTION OF ACCOUNTANCY IN IRELAND
Accountancy plays a pivotal role in delivering important professional services to all sectors of the economy. The accountancy profession provides equal important business services to the Irish economy as the direct impact of this profession encompasses all economic activity of the profession, and is quantified in terms of jobs, output and tax revenues.
CONTRIBUTION TO GDP
In Ireland, the accountancy occupation supported a GDP contribution of €12.9 billion in 2017. Where €9.7 billion was contributed to GDP by the work of in-house accountants within other Irish industries and other quarter of €3.2 billion was generated by the accounting industry itself.
CONTRIBUTION TO EMPLOYMENT IN IRELAND
In the year 2017, around 23,300 individuals were employed in the accounting, bookkeeping, and audit sector in Ireland. As data shows, there were also 37,900 in-house accountants working across many sectors of the Irish economy. The largest employer of in-house accountants by sector was wholesale and retail, which employed 6,600 accounting professionals, followed by the manufacturing and finance & insurance sectors, which employed nearly 6,000 accountants in 2017. The finance and insurance industry employs the highest proportion of accounting professionals across these wider sectors as a share of its total employment (6.4 percent). Other industries with notably high shares of accounting professionals include real estate (5.4 percent), the ICT sector (3.3 percent), and manufacturing (2.9 percent).
CONTRIBUTION TO TAX REVENUES
The accounting sector in the year 2017 raised €437 million of tax revenue for the exchequer of Ireland. It encompasses labor taxes such as income tax, PRSI, and USC, raised through the accounting industry’s workforce, as well as corporation tax, VAT, and taxes on production paid by the companies. An amount of €874 million was generated through the employment of in-house accountants in other industries. When combined with the accounting sector’s contribution, this brings the total direct tax impact of Ireland’s accountancy profession to €1.3 billion in 2017. The tax that is contributed is equivalent to 2.6 percent of all receipts of the Office of the Revenue Commissioners of Ireland in 2017. This sum is attributable to the employment, profits, and transactions that are directly supported by the accountancy profession.
THE MARKET FOR ACCOUNTANCY SERVICES
In 2017, businesses in Ireland purchased around €2.3 billion in external accounting services, which in return amounted to 0.6 percent of all B2B purchases in the Irish economy during that year. According to available data, Ireland’s financial sector was the biggest single purchaser of accounting services in 2017, spending €302 million. Hence, it is equivalent to 1.5 percent of all external purchases by the finance industry in that year. In aggregate, accounting services were highly in demand as they were driven principally by sectors such as finance, manufacturing, and wholesale and retail industries.