Finance -- On Balance

March 21, 2005
Done selectively, outsourcing finance functions can benefit governance and compliance.

Not surprisingly, given the personal attention they must pay to corporate governance and financial compliance issues as a result of the 2002 Sarbanes-Oxley Act in the U.S. and similar regulations elsewhere in the world, senior executives remain hesitant to outsource finance functions. They fear a loss of control that could result in extremely serious consequences. Indeed, 51% of the 203 senior executives responding to a recent online Accenture survey said concerns over their ability to maintain governance and compliance best practices were standing in the way of their companies deciding to outsource finance functions.

However, an impressive 43% of executives in companies that had already outsourced some finance function reported that the change had actually improved the quality of governance and compliance. And 44% said that outsourcing had made no adverse impact on, and did not diminish the quality of, governance and compliance at their companies.

Similarly, some 73% of the executives whose companies had already outsourced a finance process reported outsourcing had increased the rigor of their business processes, explaining that outsourced processes are better defined and documented, something they claim leads to greater clarity and accuracy of the numbers. What's more, 56% of the executives said outsourcing providers were better equipped to deal with frequent changes to tax codes and accounting rules while also giving greater visibility into financial processes and increasing the transparency of accounts to auditors.

"The findings show that executives increasingly believe that outsourcing of the finance function can enhance an organization's ability to ensure effective governance and compliance," says Barbara Duganier, vice president, Accenture Finance Solutions. "We believe that this significant shift in mindset is led by companies that have already outsourced their finance functions. As companies seek to achieve high performance in their business, we expect that trend to continue."

Nevertheless, the executives are not ready to write a blank check in support of outsourcing financial functions. Strong majorities of executives responding to Accenture's survey said budgeting and forecasting, treasury and cash management, information management and analysis, and financial risk management were financial functions that should remain in-house.

The survey reflects the views of CFOs, finance directors and vice presidents of finance in companies around the world with annual revenues ranging from less than $500 million to more than $8 billion.

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