Accounting plays a role in decision making of business executives in selecting among various alternative sourcing solutions as part of end-to-end business process management. Investors, employees, suppliers, lenders, regulators and others in the supply chain depend on accurate and adequately disclosed accounting information as a basis for their dealings with an enterprise customer or its service providers.
Accounting errors can arise from failure to disclose outsourcing arrangements to auditors, investors or regulators, or to accurately account for such arrangements. Revenue recognition issues become critical.
The American Institute of Certified Public Accountants has adopted a comprehensive code of ethics applicable to CPA’s who are members. This code of ethics has begun to address issues of outsourcing of non-attest functions, including preparation of tax returns.
The role of outside accountants is not the same as that of auditors. Auditors are governed by additional rules under the Sarbanes-Oxley Act.