Development of accounting outsourcing: Difficulties & prospects

        As well as known after 1990 many new understandings came to social & economics livelihood of all people who could choice freely kind of work & working place, also independently find convenient employment location according to their desire. Were found several companies those manage activities in the line of computer programming on financial calculus, preparing quarterly financial & tax statements, collecting receivables, bookkeeping, drafting documentation of accounting policy, financial consultation & auditing etc. This year National statistical office has conducted corporate census, as result of which showed that 66,5thousand legal entities registered, including 55,6 thousand business entities, 4,0 thousand governmental organizations, & 6,0 thousand non-governmental institutions. Review of financial authority confirms that about 74.5% of registered entities permanently prepare financial & tax statements, & than submit they for subsequent supervising. Herein should emphasize that business entities carry out selling revenue more 10 million MNT a year in accumulative value must register as payer of value added tax & have to submit corresponding statements to financial authorities. But however nearly 75% of registered entities prepare permanently financial statement & keep relationship with territorial tax authorities via any kind of taxation. Otherwise employers of small & medium sized companies which hold less than 20 workers couldn’t keep independent financial or accounting subdivision from accountants & financiers, however they prefer to hireling contractual bookkeepers who possess insightful experiences & professional skills on accounting. Although have commenced outsourcing development in the field of financial service & accounting haven’t adopted necessary legal regulations so far except of hiring contractual accountants for  company under Mongolian law of accounting. In addition to that hasn’t act legislation of insurances for protecting accountants from professional risks & unanticipated mistakes. Actually takes place shortage in management & professional leadership on accounting outsourcing, also any support in this area from high financial authority which responsible for methodological  ruling  until now. Support & development of accounting outsourcing will render rising of wage income for financial & accounting staffs. Monthly average family income is amounted to 513,000 MNT or US $ 366.4 from all sources as of November, 2010 which announced by National statistical office. Herein monthly real income per capita of households would be computed 366.4:3.8=US $96.4 if consider every family consists from 3.8 members according to population census. For last decade hadn’t observe declining of poverty as 40% of population is still remaining on poverty. Review appears that 56% of total population has monthly wage around 200,000-400,000 MNT or US $142.5-285. Actually physician or teacher who engages at state owned organizations (sub district hospital or secondary school) with work length up to 25 years set monthly salary 325,000MNT or US $232.1.   For years grows labor exploitation which became reality & affects on living standard of wage works, namely in private sector no exist external public & governmental controls & trade union that responsible for protecting  interests of workers. Passed for long time when owners of private sectors press new employees to work without salary or set up for them probation wage at the minimum of labor payment or approximately US $100. For instance hired dentist at dental clinic would be received monthly salary at 15% of earned revenue per month by him/her. Intellectual outsourcing in the field of finance & accounting shall be perspective direction in increasing real income for accountants. Takes place rumor of that Certified Public Accountant (CPA) prepares quarterly financial statement for small or medium sized company including tax statement by around wage of 50,000 MNT or US $36. Let’s compute achievable additional income for accountants 66,500(legal entities) 0.745(percentage of accountable entities) 0.8(percentage of small & medium sized entities) 50,000MNT(wage per accountancy):1,400=$1,415,500. But however no concrete viewpoints on size classification of enterprises & exist differences in wage system for contractual accountants still now. Researcher’s review shows that more than 95 % of social welfare had accumulated in disposal of 2% of population or 14,276 households with 55,100 family members, herein total population amounted to 2,754,6 thousand as of November, 2010 which publicly announced on June 10, 2011 according to results of census.  Following positive opportunities seem to effect on rapid & wide development of accounting outsourcing over all countries positively. (1) Globalization & integration of economics for many countries without boarder, usage of united currency over several countries, adopting united budget for them, applications in practice international standard of financial statement etc. (2) Possibilities of conducting business in any occasions of geographical location, time change, weather condition, national currencies are taking place by skilled staffs via internet communication on time. (3) Cheapest labor cost in Asian developing countries is rendering feasibility in managing offshore outsourcing from these countries in direction to high developed countries, which shall give favorable opportunities on exchanging know-how & distributing ultimate researching results. Recent survey shows that outsourcing in accounting field cuts its direct expenses by 60%. (4) Any science branch in its development process seeps through another or diversifies into separate parts. Passed over 500 years when Luca Pacioli had proposed method of double–entry bookkeeping which was starting of modern accounting practice but however it exhausts all one’s internal potential to perfect oneself on future independently, & requires integrations with other science branches first of all basing on applied & statistical mathematics, econometrics, financial engineering, accounting modeling etc. (5) Intensive growth of  foreign investment to mining industry processing & exploitations of mineral resources, including  sign up corresponding agreements for Oyu-Tolgoi & Tavantolgoi etc, which shall give favorable opportunities in looking forward  developments on the level of macroeconomics rising & equilibrium.  In general grows necessity in financial analyzing over corporate entities. However  no legal entities which conduct properly financial analysis in their activities, incurs shortage in experienced & skilled staffs in above mentioned area, & also haven’t issued affordable methodological materials for use. Taking into account above mentioned difficulties by some specialists in leadership of Prof. T. Yondon was initiated Mongolian association of chartered financial analysts, which conducts many effective measures in the field of free training, publication, consultation etc. Many modern textbooks & other training materials have been written by Prof. T. Yondon in line of Mongolian association of chartered financial analysts, summaries of these publications placed at following well known blogs of Google.com as tyondon.blogspot.com under blog title tyondon-researcher or tyondon_@yahoo.com in English edition, also tyondon.blogmn.net in Mongolian etc. By the way some hireling workers at headquarters of foreign invested companies usually don’t have necessary knowledge of Mongolian law on finance, accounting, tax, procurement, exploitation & concentration mineral resources, protecting of environment etc. Hereby should emphasize that have been prepared both methodologies of financial ratio analysis by financial & statistical authorities respectively. Unfortunately these handbooks have been translated from foreign language or copied from internet directly & haven’t covered researcher’s treatments in detail. Thus many senior tutors & supervisors of studies, who conduct profitable for them foreign & domestic financed projects, couldn’t themselves create economical-mathematical modeling & actually they come running to copying every foreign models disregarding social-economics, historical & geographical specifics of home country. (6)   Independent researching groups privately sponsored have some advantages rather than state owned authorities as: conducting their activities & preparing any summary independently because of that they no accountable to the higher organs of power, researching copyright reserves in behalf of independent co-authors, sensitive in changeable business environment, isolated from bureaucracy & bribery. Survey shows that last period number of privately owned entities which engages bookkeeping, preparing financial & tax statement, financial & accounting consulting, conducting out of auditorium practice for accounting graduates via case training directly at outsourcing office, organization of professional seminars & providing lectures online etc. Many measures performed by Mongolian outsourcing association of accountants established at the end of 2010 efficiently reflected on practice, there is should emphasize that outsourcing entities of accounting are rendering favorable possibilities to achieve practical experience for final –year students under leadership of CPA at outsourcing companies. Graduates face shortage on entities needed in passing post training practice owing to half of 105 universities & colleges which run high education activities has economics faculties. Hereby I would like with pleasure introduce about one of leader company in the field of financial & accounting  outsourcing, Global account Corporation, which has started its activities under business title “ Professional service division of finance & accounting” at Erkhemchanar LLC since November, 2007 &  officially registered & established at the beginning of 2010 as legal entity, skilled & highly experienced working crew of which consists of professionals in the field of finance, accounting, taxation, social insurance, financial application programming, financial engineering, accounting modeling, statistical-mathematical approach & econometric calculus etc. Actually majority of its staffs were worked more than 10 years at position of chief & senior accountants, accounting managers, system analysts & have earned professional degrees of contractual accountant, adviser accountant, CPA, accredited tax accountant, who accumulated excellent experiences of all fields of business, marketing & non manufacturing service. Aimed goal of this company describes as following “Exchange of Mongolian intellectual potentials over the domestic & overseas markets”, & also below summarized main directions of its activities:

Providing consulting service:

ь  Professional consulting of financial management, accounting & financial statement analyzing,

ь  Consulting on legislation of social insurance & tax,

ь  Consulting & practical applications of financial & accounting programs.

Outsourcing service:

ь  Financial statement analysis, cost & management accounting calculus in complex,

ь  Preparing financial statements for companies & organizations,

ь  Creating accounting policy documentations corresponded to Mongolian Law of Accounting & International Standard of Financial Statements,

ь  Rendering services on social insurance & calculus of labor expenses,

ь  Preparing all kinds of taxation & their statements,

ь  Conducting tax controls,

ь  Carrying out internal financial control & managerial monitoring.

       Meanwhile numbers of its clients continuously rise & those already have exceeded half hundred, including Samsung electronics, Bars group-KhSTL  LLC, Trade center APTI, Khumana center. Also this company cooperates with following organizations: as National General Tax Administration, Mongolian Institute of Certified Professional Accountants, Association of Accredited tax accountants, Mongolian outsourcing association of accountants, Chartered financial analysts of Mongolia, TAMBAS program of European Bank reconstruction & development, Interactive LLC etc. If you would like to cooperate with Global account Corporation, please connect at link: email: email_gas@yahoo.com & WEB: www.gac.mn or www.e-tax.mn. Phone: 99108830, 98108830, 91108830, 94(01-04)8830.

        Indeed advantage of accounting outsourcing shows itself in following items: (1) providing outsourcing service by skilled & experienced professional team, (2) decreasing direct labor cost & manufacturing expenses with respect of accountant’s wage, his social insurance, office stationary, computer, internet & leasing etc, (3) economizing on fixed expenses as purchasing of computer application programs office furniture, (4) ensuring business securities, covering staffs with professional responsibility insurances, conducting proper internal control & effective external audit, (5) to regard as superior professional ethics of bookkeepers & accountants, fulfilling of social responsibilities for both sides of outsourcing provider & its clients, (6) rendering favorable opportunities to clients in saving capital budgeting, rising  business productivity of their brain workers via efficient exploitations of labor hours & the first putting know how into accounting practice & financial calculus etc.