Outsourcing implications for accounting practices

Abstract

Discusses the treatment of outsourcing in company accounts. In particular, it considers the application of several accounting standards that may be relevant to the presentation of outsourcing agreements in the financial statements. The way in which these principles are implemented in the relevant financial statements, with respect to outsourcing between 1991 and 1997, is the main focus of the paper. In practice, accountants, in the majority of the cases, consider outsourcing contracts as immaterial contracts and, generally, they do not include any note of the outsourcing contracts in the financial statements. This implies that accountants (auditors) consider each outsourcing contract as an individual contract without taking into consideration its aggregate effects. Finally, the degree to which FRS 12 raises issues with respect to the outsourcing agreements is considered in this paper and their presentation in accounts is considered.

Citation

Juma’h, A.H. and Wood, D. (1999), "Outsourcing implications for accounting practices", Managerial Auditing Journal, Vol. 14 No. 8, pp. 387-395. https://doi.org/10.1108/02686909910301457