Working with Offshore for the first time? We failed our first year at Big Four. Learn from my mistakes.
In the last two months, we have been interviewing our customers on some hot topics post busy season. One topic that bubbles to the top is offshoring pieces of the audit. As more and more accounting firms are transitioning towards outsourcing areas of their audit practice, we are seeing firms that are flat out failing and some that are wildly successful. In 2010, I was hired at PwC as an audit associate. During my second busy season, we tried using teammates in India to perform testing on our private companies. I can still remember this not because we were using offshore resources but because how bad it went. I was so frustrated with the entire process. My frustration was not because of lack of effort or intelligence, but because of lack of resources and leadership. In this blog post, we will revisit what I wish someone had told me 10 years ago.
At a high level, there are two approaches that firms can take when it comes to offshoring. First some firms will be embedding a resource as a team member. Other firms will offshore an entire work stream (i.e. all cash testing). Firms that embed a team member are essentially replacing the first year staff with an outsourced resource. The second approach is where low risk audit areas such as testing cash get outsourced. While there is no right or wrong way to do this, there are certain tips and questions your team can consider that can help make the process successful.
Here are some general tips to help enable your offshore audit team's success:
Call them a team member, not an offshore person: This small change can have an impact on the mindset of your team. It helps to create a sense of inclusion and respect, crucial elements for any successful team. This starts with the tone from the top. Partners and senior management need to not say offshore. If you hear someone say offshore inside your firm, correct them immediately. This simple technique will pay huge dividends long term at the firm.
Make use of overlapping hours: A common challenge when working with an offshore team is the time difference. However, with some careful planning, you can make the most of the overlapping hours to ensure efficient communication and collaboration. If you want to be successful make sure you rearrange your schedule to be a part of these hours. Have them blocked off on the calendar always. You can always cancel if there are no relevant topics. Over communication is always better than under communication.
Use simple language when communicating: Keep in mind that your offshore team may not have the same level of English language proficiency as your onshore team. Therefore, it is important to use simple and clear language when communicating with them. Being direct is the best policy here. If something is bothering you, say it now and say it clearly. Being from Tennessee you can imagine how some of my analogies can cause confusion :)
Don’t micromanage: Trust your offshore team to get the job done. Even though they are not in the U.S. It does not mean that they are not professional or take pride in their work product. Micromanaging can be counterproductive and undermine their confidence. Have status updates like you would any other team member that is onshore.
Now that we have the general tips down, let's take a look at how your firm can identify an entire audit area to outsource. For this we recommend your firm spend time answering the following questions.
What tests are standardized across all audits at your firm?
Standardizing the audit test creates a clear and understandable process that can be followed by anyone in your firm, regardless of location. Often the lower risk areas such as working capital tests (excluding estimates and allowances) are standardized or pretty close to being standardized.
Now let's take it one step further.
Are the testing templates standard across your clients?
Standardizing testing templates makes it easier for your offshore team to perform their tasks and ensures consistency and accuracy across all clients. For most firms here is where we see the process begin to break down. When doing the research on this, they will find they have 3 or 4 different templates used to test bank reconciliations or subsequent receipt testing templates. This creates inconsistencies and opportunities for failure.
Is the process the same across your clients?
By making the process transferable, you can streamline your audit work and save time, resources, and effort. Hardly any firms get this process right because this is all encompassing. Here the key is to drill down on the entire end to end process. For example, does the PBC request look the same across all my clients? Does each client upload the request to the same spot? Does the client upload look the same across all clients that use the same system. Firms that get this right can really maximize the use of offshore resources.
Enabling your offshore audit team to be successful requires careful planning and execution. By following the tips shared in this blog post, you can help ensure that your offshore team feels like a valued part of your team. Additionally, by considering the questions posed, you can make the decision on which audit areas your team might consider outsourcing.
Here at Audit Sight, we specialize in helping firms to be successful in outsourcing entire areas of the audit. Our solution standardizes audit tests and testing templates, enables the offshore team to be more efficient, and delivers notifications to the onsite engagement team. By leveraging our capabilities, you can be confident in the success of your offshore audit team. We also have partnered with outsourcing providers that are trained on our software. This allows your firm to get the best of both worlds (i.e. testing is eliminated via technology and the tests are performed by a cost efficient resource).
Audit Sight Team