Accounting outsourcing practices in Malaysia

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Document Information:

Title:	Accounting outsourcing practices in Malaysia
Author(s):	Ruhanita Maelah, (Associate Professor at the School of Accounting, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia), Aini Aman, (Associate Professor at the School of Accounting, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia), Rozita Amirruddin, (Senior Lecturer at the School of Accounting, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia), Sofiah Md Auzair, (Senior Lecturers at the School of Accounting, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia), Noradiva Hamzah, (Associate Professor at the School of Accounting, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Malaysia)
Citation:	Ruhanita Maelah, Aini Aman, Rozita Amirruddin, Sofiah Md Auzair, Noradiva Hamzah, (2012) "Accounting outsourcing practices in Malaysia", Journal of Asia Business Studies, Vol. 6 Iss: 1, pp.60 - 78
Keywords:	Accounting, Control, Decision making, Malaysia, Outsourcing, Process,Risks
Article type:	Research paper
DOI:	10.1108/15587891211191380 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Acknowledgements:	This study was financially supported by Research Grant University (UKM-GUP-EP-07-16-119) and Fundamental Research Grant Scheme (UKM-EP-05-FRGS0054-2009).Received: 6 December 2010 Accepted: 27 May 2011
Abstract:	Purpose – Firms in Malaysia are in an enviable position in view of Malaysia's standing as a leading outsourcing hub in the region. Despite that, little is known about the accounting outsourcing practices, risks and control in Malaysia. This paper aims to explore the practices, decisions, processes and perception of risks and control in accounting outsourcing. Design/methodology/approach – This paper is written based on survey data which were collected using a questionnaire. The questionnaires were directed to the head of the accounts and finance department of each company. A total of 51 companies participated in this study and approximately 47.1 percent of the respondents are involved in accounting outsourcing. Findings – Findings show that the most common outsourcing activities are financial reporting and auditing while the main reasons to outsource are quality service, core competencies and scale economies. The decision to outsource accounting services is related to the type of industry and expertise in the firms. Most of the firms outsource their preparation of account and audit work as well as tax for better quality services. Firms rely more on formal contracts and concerns about confidentiality and security of accounting data. Research limitations/implications – Because of the limited number of responses, the findings may not be generalized to the overall population. Nevertheless, they can be used as background information for subsequent research in accounting outsourcing activities. Future research may consider the use of in-depth case studies for understanding challenges in accounting outsourcing particularly in making decisions, managing processes and mitigating risks. Originality/value – While it can be regarded as exploratory, this study makes an attempt to uncover the risks and control issues in accounting outsourcing. The findings will contribute to the body of knowledge in accounting outsourcing and enhance the understanding of the current accounting outsourcing practices in Malaysia.