Mar 2015

March 2015 Newsletter – Update from your Odyssey Outsourcing team

By: Odyssey Newsletter

Outsourcing gains momentum…

As outsourcing gains momentum, it seems many experienced outsourcing services providers are having trouble keeping up with demand. A number of accounting firms are tinkering with services from the Philippines.

Sadly the Philippines currently lacks large numbers of Australian experienced tax accountants, so we’ve seen this business model initially involve Australian firms paying cheaper rates for Philippine workers… so the Australian firms are effectively training the staff, and we’d expect the prices to increase as skill levels increase…

The most challenging part of raising up a competent offshore team…

We’ve seen one firm advertise their services, stating to prospective customers/firms that the staff they hire will…

  • require supervision and training by the accounting firm,
  • not know anything about Australian tax
  • be unlikely to have heard of Xero
  • not know what a Business activity statement or superannuation is
  • not be familiar with Australian businesses/brands such as Coles; Woolworths; Bunnings etc, with ,most suppliers unique to Australia to be googled… all adding to the time.
  • Tax will be the most challenging part of raising up a competent offshore team.

Tax Agent

Code of Professional Conduct – Confidentiality of client information

Before we all jump on a plane overseas… in August 2014 the TPB released  TPB(I) 21/2014 Code of Professional Conduct – Confidentiality of client information.

This seems a clear message to get your outsourcing affairs in order with the onus being clearly documented as being the responsibility of the Tax Agent

Some interesting notes from this release:

Disclosure – disclosure by a registered agent to a third party requires the client to be clearly informed and permission obtained, e.g signed letter of engagement,

Third parties – third parties are strictly anyone outside the Tax Agent’s entity and so this appears to also refer to the provision of information relating to disclosure even between practice structures such as the operating entity to a related service trust within the tax-agent’s group. A third party may also include entities that maintain offsite data storage systems (including ‘cloud storage’)

Work completed overseas – The TPB strongly suggests that if any component of a client’s tax work is to be completed overseas, a registered agent should be very clear in communicating this to the client and obtaining the necessary permission

Onus on the practitioner – Ultimately, the onus is on the registered agent to exercise appropriate due diligence when outsourcing work, including ensuring appropriate disclosure.

The future for Tax Agents & BAS Agents

The future for Tax Agents & BAS Agents

The Tax Institute president in his final Dec/Jan column commented:

“From 2016 onwards, the proposed introduction of SBR will also exert pressure on tax agents to change the way that they prepare tax returns. In the short term, these changes will create technological issues for tax agents, but in the longer term the changes are likely to drive changes in the way tax agents interact with their clients.”

Looking five years ahead… CPA’s ITB February 2015 noted… the number one factor to consider is the future of your practice. Services like preparing tax returns are becoming automated and commoditized. But advise will always be valued by clients

Blunt enough? . . . Old news, but in case you missed it .. in mid 2014 the Australian Tax Office also delivered a blunt message – the world for tax practitioners is about to be turned upside down! Within two years, there is an expectation that the way businesses interact with the ATO – and by extension, the way they communicate with their agents, and the role those agents play on behalf of their clients – will be totally re-engineered.

The focus will be on real-time reporting, and new accounting systems will transmit data directly to the ATO every time a sale or a purchase is made, every time a payroll transaction goes through, every time an employee is hired or fired.

The days of businesses storing data internally, passing it to their tax or BAS agent to be synthesised into business activity statements or tax returns which are then transmitted to the ATO by the agent are coming to an end.

According to a recent article on Digital First,“The top 3 priorities on the ATO’s roadmap”the current tools used by agents in their interaction with the ATO – notably ELS and the Portal – are on their way out and will be replaced by a new iteration of Standard Business Reporting (SBR).

We forecast it won’t be long until businesses are lodging their own BAS using Standard Business Reporting (SBR) enabled software.  If businesses can save up to a couple of hundred dollars for each lodgment by lodging online at the push of a button themselves, then it means this is one less business stream for bookkeepers/accountants. In this case compliance isn’t just commoditised… it ceases to exits.

And if BAS is dying, then what happens to the BAS agents?

Commoditization, Disintermediation…

Disintermediation… Earlier this week we were contacted by an accountant who had just received a new client into their office. They’d left their previous accountant and had come to the new accounting firm with the condition that their work must be sent over to Odyssey… first time we’ve seen that happen!

Commoditization, Disintermediation…

An annual survey of 175 accounting firms by Melbourne consultancy Bstar, published this week, shows practice values dropped by nearly 15 per cent in the past 12 months, due to the commoditization of bread-and-butter work, and the government’s automatic lodgement program… the government’s so-called “one-click lodgement” is not far away.

It will bypass accountants and eliminate a big chunk of their revenue. According to a recent article in BRW, “Rob Nixon on the future of accounting”, any job that can be done over the phone or behind a computer can be done overseas for between 50 and 90 per cent cheaper, faster and often better!

A letter from Chris…

Earlier this year Chris wrote to us stating…

Using the cloud has been a double edge sword. Whereas we were providing a lot of bookkeeping and managing before, now once a new client is set up the support required is minimal.

With the foreshadowed change in the approach by the ATO to sucking live data from small business clients we will need a vastly different model and have a different role to play in the future. For my part I have jumped ahead and established <business name removed> services for small business. This has worked well and needs to expanded.

Can the accounting profession ‘keep up’ with clients and the cloud?

In an interesting publication, “Can the accounting profession ‘keep up’ with clients and the cloud?”  by CCH, it’s clear that the cloud is here to stay with a staggering 69% of firms already using cloud software with their clients and the news that this is only going to continue to grow!

The myth of fulltime resources…

But my firm needs to have full time resources on hand?!

A recent article in the Economist, “Workers on tap” stated that:

“Rather than controlling fixed resources, on-demand companies are middle-men, arranging connections and overseeing quality”

Clearly, this shift from “things” to “services,” from “ownership” to “sharing,” “exclusion” to “inclusion” will require a massive shift in leadership and a new business model… the next… according to a recent article in Forbes, “Leadership, The Internet, and the Eclipse of Capitalism” decades of disruption to the global workforce by this new economy will create both obsolescence and new industries… It is already changing the way our children and grandchildren regard labour.

Getting a little crowded

Yes, while it’s true the outsourcing space is getting quite crowded, we’re actually referring to our website and the addition of some of our credentials.

Odyssey Resources has just been through a stringent review during the renewal of our Australian Tax Agent licence including detailed examination of our documentation and procedures. We’re pleased to report our licence has been extended out to 2018.

As we’ve been told, Odyssey is the only foreign company registered as an Australian tax agent, so you’re unlikely to find any other foreign company displaying the registered tax agent symbol on their site.

Our Accreditations

And we’ve been delighted that CPA Australia has recognised us and a CPA “Recognised Employer partner”, so we’re now able to display this on our website also. Odyssey is pleased to support CPA Australia in Ho Chi Minh City, and Odyssey employees are supported in their Australian CPA.

7th largest foreign accounting firm… and growing

By the way, Odyssey has been setup as a foreign owned accounting company in Vietnam, and ranks as the 7th largest foreign accounting firm – we were muscled out by the Big 5 !!

Odyssey Staffs

Thank you

From all of us at Odyssey we’d like to thank those who use our services, or have considered using our services.